Team build­ing. Pipeline re­vamp. For­ward thrust. What does a decade of deals at Gilead tell us about Daniel O’Day’s first M&A moves?

Daniel O’Day dur­ing Roche’s an­nu­al re­sults me­dia con­fer­ence in Basel, 2018. AP Im­ages

To­day marks the start to Daniel O’Day’s first full week as CEO of Gilead. And if the slate of new hires to the helm of large cap com­pa­nies over the last 2 years helps high­light the path ahead, one of his first ma­jor acts will like­ly be a full pipeline re­view with a clean out and some new deals put in­to play, af­ter he puts his top team to­geth­er.

Team build­ing is job #1, be­cause the founders are all gone. But with biotech buy­outs all the rage right now, can O’Day — a long­time Roche vet­er­an — af­ford to wait out the M&A game now in full swing?

Gilead has made in­dus­try his­to­ry with 2 big buy­outs — the Phar­mas­set deal, which was in­cred­i­bly suc­cess­ful though short lived for bril­liance, and the more re­cent Kite ac­qui­si­tion in 2017. Kite vault­ed Gilead to the front of the CAR-T line, but it’s brand new, with on­ly a trick­le of rev­enue from a lead­ing drug and lots of ques­tions about new and bet­ter ri­vals in the pipeline.

Their re­cent $820 mil­lion write-off re­lat­ed to Kite has raised alarms about more to come.

The com­pa­ny is see­ing dwin­dling hep C rev­enue, but has a sta­ble for­tune com­ing in from HIV, where they con­tin­ue to suc­cess­ful­ly de­fend the king­dom with new, eas­i­er to use ther­a­pies.

That’s not re­al­ly ex­cit­ing any­one, though, about a big­ger, brighter fu­ture. Its big NASH drug selon­sert­ib just flunked a Phase III, as in­vestors are won­der­ing who can re­al­ly make a dent in that field. As for Gilead, it’s com­plet­ed a slate of NASH deals, like­ly in search of a new cock­tail that can dom­i­nate an emerg­ing mar­ket. But that’s go­ing to take time. And while some an­a­lysts are spec­u­lat­ing about a block­buster fu­ture for fil­go­tinib, Pfiz­er’s safe­ty is­sues with its JAK in­hibitor Xel­janz has raised se­ri­ous safe­ty is­sues for the class.

So where does Gilead turn now?

For some in­sight, we turned to Chris Doko­ma­ji­lar at Deal­For­ma to give us the panoram­ic view of Gilead’s deal­mak­ing record over the last 10 years, which you can see in de­tail be­low.

The sum­ma­ry:

— 71 deals in­volv­ing Gilead on ei­ther side of the deal since Jan. 2008
— 45 of these with Gilead on the buy­ing side

These in­clude:

— 10 ac­qui­si­tions
— 23 de­vel­op­ment and com­mer­cial­iza­tion in-li­cens­es
— 4 R&D part­ner­ships
— 2 aca­d­e­m­ic part­ner­ships
— 6 oth­ers, ser­vice deals, etc. plus its $125 mil­lion deal to buy a pri­or­i­ty re­view vouch­er

Soon af­ter its Kite deal, Gilead fol­lowed up with a pact to scoop up Cell De­sign Labs for $567 mil­lion, fit­ting square­ly in­to for­mer CEO John Mil­li­gan’s plan to re­main a leader in the cell ther­a­py field. But Gilead is not typ­i­cal­ly a blue-sky ven­tur­er, look­ing for lots and lots of dis­cov­ery deals. The com­pa­ny tends to be high­ly fo­cused on ac­qui­si­tions and de­vel­op­ment deals, with an em­pha­sis on com­mer­cial­iza­tion.

Its R&D group un­der for­mer re­search chief Nor­bert Bischof­berg­er has a rep­u­ta­tion for mov­ing fast, ef­fi­cient­ly and ruth­less­ly through Phase III. When they are on track, Gilead can be a very ef­fec­tive R&D ma­chine. But that’s a rep that takes years to build and months to lose.

Just ask Cel­gene.

Sev­en of its 23 de­vel­op­ment and com­mer­cial­iza­tion in-li­cens­ing pacts were pre­clin­i­cal, with 9 in the plat­form realm and the rest scat­tered from Phase I to Phase III.

We know what Gilead has done. Now it’s up to O’Day to tell us what’s next.

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