Gilead Sciences Inc. (Foster City CA) has poached a top cancer specialist from Swiss drugmaker Novartis AG (Basel) as the US healthcare group sharpens its focus on oncology. Alessandro Riva will become a Gilead senior vice president and head of its hematology and oncology therapeutic area, the US company announced late on Tuesday.@GileadSciences has poached a top cancer specialist, Alessandro Riva, from @Novartis Click To Tweet
Riva hails from Novartis Oncology, where he was global head of oncology development, says Reuters. He was responsible for developing more than 20 cancer compounds, including targeted and immune-oncology therapies.
He also oversaw regulatory approvals of new medicines in both solid and hematological malignancies, Gilead said.
During his 12-year tenure at Novartis, Riva was involved in several worldwide drug approvals, it said.
“I have always admired Gilead for its scientific focus and data-driven approach to drug development,” Riva said in a statement.
Novartis shares were down 4% at $69.74 in New York, while Gilead jumped 6% to $76.03.
It certainly didn’t take long for Gilead to burst out of the New-Year blocks with an announcement (alright, unofficial tip) to the world that it’s planning to expand—BIG TIME—into another lucrative corner of specialty medicines.
With its pipeline bogged down in safety issues and other problematic data, and analysts insisting on a rational, strategic vision to offset the inevitable, competitive response to its monster hep C monopoly, Gilead managed to steal one of the big guns in oncology drug development to head up its cancer R&D push.
The move appears to signal that Gilead isn’t content to simply roll with its residual R&D oncology pipeline. Instead, the hiring of a chief of hematology-oncology from Big Pharma makes it look as though it wants to be an actual “player” in oncology.
In the cancer field, Gilead was forced to halt a lineup of 6 studies for Zydelig in the spring of 2016 due to safety issues. And that came after the drug was clearly losing a race with Imbruvica from J&J and AbbVie for leukemia and lymphoma.
AbbVie and Roche’s venetoclax, meanwhile, is expected to gain market ground in CLL (chronic lymphocytic leukemia). Then in November came subpar data for momelotinib, which has been struggling to distinguish itself from Incyte’s Jakafi for myelofiboris.
Clinical setbacks, though, are all the rage at Gilead, Carroll notes, which has been racking up failures throughout 2016, including four straight bombs late in the year.
What Gilead does have is cash, and tons of it. Riva may have less to do in the clinic right now than at the deal table, where Gilead may yet spend a significant amount of its cash reserves on M&A and licensing. Gilead clearly needs to do more in oncology/hematology.
Brian Abrahams at Jefferies thinks that could be the case. He noted:
“We believe the relatively high-profile heme/onc chief hire signals an increasing focus in oncology, a welcome development, and expect Gilead to more aggressively pursue BD (business development) to build out a broader cancer pipeline–something not substantially baked into most expectations but which we believe could help improve sentiment around the name and LT revenue prospects. We expect speculated small to mid-cap M&A candidates like Incyte could also trade up on this announcement.”
Well, that’s making a call we can all wrap our heads around. Indeed, Incyte might just fit Gilead’s strategic acquisition plan (assuming it has one); and numerous smaller companies are easily affordable to create a strong “string of pearls” oncology division, as DoctorRx at Seeking Alpha puts it.
While there’s been some prattle about something possibly happening with Gilead’s oncology franchise, it still surprises many of us that a high-powered senior executive with Novartis Oncology–a Star, if you will– has signed on to a relatively small position as head of hematology and oncology at Gilead.
Prior to joining Novartis, Dr. Riva co-founded the Breast Cancer International Research Group (BIRG) and Cancer International Research Group (CIRG), for which he served as CEO and CMO. During his career, Alessandro has authored or co-authored more than 100 oncology research manuscripts and abstracts.
Meanwhile, there are two seminal questions, the answers to which seem to point to the supposition that one or more acquisition targets are in play now at Gilead. First, why would Dr. Riva join this backwoods of hematology-oncology research. The related question is why Gilead in all likelihood offered him a deal for his abilities that he couldn’t refuse.
Answer? Gilead has a large effort in oncology, and the hematology part of such effort looks shaky, both as discussed above and based on some other previous disappointments.
It’s not hopeless, but if idelalisib is too toxic for frontline use, where does the big blockbuster success come from? For a small market cap company, one might view things differently, but given Gilead’s colossal market cap, so far, its oncology effort hasn’t produced diddly.
There’s no telling what public and private companies Gilead and Dr. Riva might have discussed in building a string of pearls strategy in oncology. While prices are hardly bargain basement, Gilead may finally want to go this route. Four CAR-T companies, or companies in similar fields, have a combined market cap of only $5 billion. They are:
Bottom line: responsibility for improving the fortunes of the unit will now fall on Dr. Riva, FiercePharma points out. On Riva’s watch, Novartis wrapped up a pivotal trial of CDK 4/6 drug LEE011 early, took a CAR-T program to the cusp of FDA approval and secured regulatory passes for products including Farydak, Odomzo and Zykadia.
Perhaps as importantly, given doubts about the strength of Gilead’s cancer pipeline, the Novartis oncology unit wheeled and dealt during Riva’s stint at the helm, although it has been most active in adding preclinical assets. In recent years Novartis has augmented its pipeline by inking deals with biotechs including Surface Oncology, Xencor and Xoma.
Gilead shares surged 6% to $76.03 on this news. It remains in its downtrend, though, having hit $80 intra-day right after the election. The actual process of either bidding for Incyte, following a string of pearls strategy, or executing some other strategy that would utilize Dr. Riva’s talents to their fullest can take time and is not guaranteed to have a lasting positive effect on Gilead’s share price.
As far as Novartis is concerned, other people will need to step up and fill Dr. Riva’s shoes. The Swiss giant has faced upheaval of its own over the past 12 months. The folding of the cell- and gene-therapy team into the larger oncology group saw 120 people–including unit head Usman Azam–leave the company. And in September Novartis Oncology veteran Hugh O’Dowd left the company to take up the CEO post at Neon Therapeutics.
Then Wednesday, Greek officials announced that they are investigating Novartis for bribery in the wake of local media reports raising questions about the company. It is the fourth set of bribery allegations against the Swiss drugmaker to go public in the past year.
Unlike companies such as Gilead that are growth-minded and actually making moves, Novartis still is a puzzle with its tread-water philosophy, continuing, for example, to dither about its possible acquisition of generics drugmaker Amneal months ago. (Rumor has it that an insider at Novartis says it’s a done deal, but not worth $9 billion. There’s no stock play because Amneal is privately held.)
All of the foregoing commentary, with its speculation about corporate motives and the timing of potential M&A, can’t possibly be predicted accurately. Trends, on the other hand, are founded on good ole-fashioned data.Steve's Take: Expect many more M&A deals in the #NewYear Click To Tweet
And Allergan’s surprise buy of LifeCell just before Christmas, and now this opening move by Gilead, essentially putting its cards on the table this early, well, I smell deals. Lots of deals. And someone who loves dealmaking is about to become our new Commander-in-Chief.
Me thinks it’s time to go shopping.