Gilead Sciences' revenue may be shrinking, but CEO John Milligan just got an 11% raise

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Gilead CEO John Milligan aims to recharge revenue growth by succeeding in new markets, including that for CAR-T cancer therapies. (Biotechnology Innovation Organization Fireside Chat/YouTube)

Gilead Sciences completely transformed its business model last year when it got into the cell-therapy field by buying CAR-T developer Kite Pharma for $11.9 billion.

Its top line won't be transformed so quickly. Kite’s cancer CAR-T, approved by the FDA in October, faced early reimbursement hurdles that hampered pickup. Declining sales in the company’s hepatitis C franchise drove Gilead’s total revenues for 2017 down 14% to $26.1 billion.

But those challenges didn’t stop Gilead’s board from boosting CEO John Milligan’s pay package by 11% to $15.4 million for the year, according to the company’s latest proxy statement. Milligan's base salary increased just 3% to $1.54 million, but his stock and option awards grew, as did his incentive pay, which rose to $3.2 million from $2.6 million in 2016.

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“Our annual bonus plan is designed to reward the achievement of key short-term corporate objectives (such as research and development and strategic goals), as well as individual performance objectives that drive our longer-term corporate performance and growth,” the proxy explains. “Our Compensation Committee believes this pay-for-performance incentive plan provides a balance between the short-term and long-term goals of Gilead.”

RELATED: Gilead strikes back at GSK with positive HIV head-to-head trial data for expected blockbuster

The Kite acquisition certainly went a long way toward satisfying Gilead’s longterm goal of diversifying beyond HIV and hepatitis C. But in the short term, Gilead’s bread-and-butter has presented the company with some daunting challenges. Gilead’s hepatitis C treatments Sovaldi and Harvoni plummeted from their 2015 peak of $19.1 billion to $9.1 billion last year, as the overall patient base shrank and Gilead struggled to compete with a less expensive option from AbbVie called Mavyret. In February, Gilead disappointed investors with its projection that hep C sales would come in between $3.5 billion and $4 billion this year.

Then there are the hurdles facing Gilead’s HIV unit. The company's blockbuster combo, Biktarvy, reached the FDA finish line, and the drug launched in February. But it's up against stiff competition from GlaxoSmithKline’s Tivicay and Epivir.

The two companies seem to be in a data war of sorts, engaging in multiple head-to-head trials as each tries to demonstrate that its cocktail is superior. Gilead had the most recent victory in that war, releasing data in March from a trial of 563 HIV patients that showed Biktarvy is noninferior to a three-drug GSK treatment.

RELATED: Gilead’s longtime R&D lead Bischofberger steps down

Gilead is gunning for a huge new market with a novel drug it’s developing to treat nonalcoholic steatohepatitis (NASH). It unveiled early but promising data last year. Now it’s in a race for what’s estimated to be a $20 billion market with multiple pharma rivals, including Novo Nordisk and Intercept.

Still, Gilead sent a strong signal that executives aren’t entirely happy with how the company is progressing in its stated short-term goal of boosting R&D. The total compensation for longtime R&D head Norbert Bischofberger, Ph.D., was taken down slightly to $6.1 million last year—quite a bit below his 2015 compensation of nearly $7 million. In March, Bischofberger stepped down without providing a reason for his departure.

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