When John Milligan speaks, people listen -- or at least they should if they want to know what's going on with Gilead Sciences (NASDAQ: GILD).
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Milligan, who has been Gilead's CEO since March, spoke on Tuesday at the Piper Jaffray 28th Annual Healthcare Conference, held in New York City. Here are five things he said that investors interested in Gilead's future need to know.
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Don't expect big healthcare changes immediately
Like many biotechs, Gilead's stock enjoyed a bounce immediately following the surprising outcome of the U.S. elections in early November. Will a Trump administration and Republican majorities in both houses of Congress mean that the New Year will be a happy one for Gilead? Milligan attempted to lower expectations of big changes.
While a Hillary Clinton presidency could have resulted in heavier pricing pressure, John Milligan noted that "some will keep pushing the agenda" about drug pricing. He added that the actual prices paid for Gilead's hepatitis C drugs are much lower than the list prices. Despite this, Milligan said that the "old story" about high prices for Harvoni and Sovaldi gets "rehashed every two months by the same people."
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Because of the election results, Milligan thinks that there could be healthcare policy changes in 2017. However, he said that he has "no idea what that will look like." He doesn't think the impact of any changes will be felt next year, since it will take a couple of years to transition to something new.
Unsure what will happen in 2017 for hepatitis C franchise
While Milligan wryly commented that 2016 was "very interesting to watch" with respect to Gilead's hepatitis C franchise, he punted on predicting what next year might hold in store. He said that the challenge is that "each quarter has a different dynamic."
The recent launch of new hep-C drug Epclusa brought in higher volumes of patients with genotypes 2 and 3. More Veterans Administration and Medicaid patients are entering the mix than earlier. Patients who aren't as sick could continue to face barriers as payers require prior authorizations.
Still, though, Milligan said that he doesn't "see anything disruptive" happening in 2017 with Gilead's hepatitis C franchise. Prices have already been negotiated with payers. Gilead has continued to see a slight downward trend in the number of private-sector patients. The big question for the New Year is when, or if, that trend will stabilize.
Return of the old Gilead
For many years, Gilead Sciences was nearly synonymous with HIV, thanks to the company's powerful HIV franchise. The launch of blockbuster hepatitis C drug Sovaldi, followed by Harvoni, changed the biotech significantly. Milligan hinted that in some respects there could be a return to the old Gilead.
He said that Gilead will focus more on its HIV business. Milligan noted that the HIV product lineup is "strong and growing," adding that he expects the business to be strong for at least the next decade.
Although Gilead will return to its roots somewhat with the focus on HIV, Milligan was quick to point out the biotech's efforts to expand into new indications. One disease received special attention: nonalcoholic steatohepatitis (NASH).
Milligan sang the praises of pipeline candidate GS-4997 (also known as selonsertib), which is in a mid-stage clinical study targeting NASH and another targeting alcoholic hepatitis. Gilead presented positive results from the NASH study earlier in November.
According to Milligan, the biotech has confidence that GS-4997 "could be a game-changing kind of drug." He said that with this pipeline candidate, Gilead could have "the beginning of a very important NASH franchise."
Tortoise vs. hare
Anyone expecting Gilead to make a mad dash to buy another company will probably be disappointed. John Milligan stated that some people want the biotech to make an acquisition, "prices be damned." That's not his approach.
Milligan reiterated previous comments about Gilead's acquisition strategy, saying that the company "will be disciplined and thoughtful" with any purchases. He said that Gilead wanted to make sure the biotech makes deals only with a high probability of a positive return.
Some deals "might look good on spreadsheets" but would be difficult to manage, according to Milligan. While some investors (including me) have clamored for Gilead to move forward quickly with one or more acquisitions, his statements suggested that in the proverbial race, the company will be more like the tortoise than the hare.
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