Shares of biotechnology firm Gilead Sciences (NASDAQ: GILD –$78.92) are weaker in extended trading as the drug maker announced the resignation of its chief executive even though it posted stronger-than-expected quarterly results. Gilead reported its second-quarter net income fell to $1.82 billion from $3.07 billion a year earlier. On an adjusted basis, it earned $1.91 a share, well above analysts’ projections of $1.56. Revenue declined to $5.65 billion from $7.14 billion, but higher than expectations of $5.2 billion. Sales of its key hepatitis drug Harvoni dropped from $1.38 billion to $331 million. The pharmaceutical company also said John Milligan is resigning as president and CEO but will remain with the company until the end of the year as the Board of Directors searches for his successor. The company’s chairman John Martin will be stepping down as well. Management revised full-year guidance from a range of $1.41 – $1.51 per share to $1.50 – $1.60. The Foster City, California company also maintained its quarterly dividend at $0.57 per share yielding 2.9%.
The departure of the two top executives brings new uncertainties to the stock and without a meaningful catalyst to boost sales as its hepatitis franchise continues to ebb, the shares will probably continue to tread water. However, with nearly $24 billion in cash on hand, a sizable acquisition could help spur long-term growth.