Gilead Sciences' (GILD) cancer business, a hoped-for source of future earnings growth, has hit some turbulence.
Philippe Bishop, the former Genentech scientist recruited to lead clinical development of Gilead's cancer drug pipeline, left the company in February.
This week, Gilead halted six clinical trials involving its blood cancer drug, Zydelig, because of serious side effects. Some patients died.
The two events aren't related, Gilead said, but collectively they raise questions about the robustness and direction of the company's cancer business at a delicate time.
Gilead shares have declined 11% this year, which is actually tops among all the large-cap biotech companies. But Gilead also trades at the lowest forward P/E multiple of its peers because investors are worried that sales of the company's hepatitis C drugs have already peaked, yet a future source of robust earnings growth hasn't been identified.
Cancer may become Gilead's next big growth driver, but you can't fault investors today for having doubts.
Bishop was hired by Gilead with a fair amount of fanfare in December 2014. Bishop came from the Genentech arm of Swiss pharma giant Roche (RHHBY) , where he was involved in the clinical development of many of the company's most important cancer drugs. He didn't last long in the Gilead job.
"With Philippe, I can't get into the details but we, collectively, both of us, came to the conclusion that it was best that he depart," said Gilead Chief Scientific Officer Norbert Bischofberger, in an interview Wednesday.
The six clinical trials shut down this week were all testing Zydelig in combination with other cancer drugs in patients with newly diagnosed (previously untreated) leukemias and lymphomas.