Shares of biotech giant Gilead Sciences (NASDAQ:GILD) lost a staggering 12.5% of their value in October, according to data from S&P Global Market Intelligence. What sparked this double-digit move lower?
Gilead's shares cratered last month for a whole host of reasons, including the never-ending drop in its hepatitis C drug sales, concerns about the long-term durability of its core HIV franchise, and Yescarta's slower-than-expected commercialization. And on top of all of these problems, Gilead has been slow to name a successor to outgoing CEO John Milligan, who is set to step down by year's end.
Until a new CEO has been appointed, Gilead will continue to come across as a company with little to no vision for its future. Currently, the biotech is taking a shotgun approach toward driving future growth by investing broadly in new anti-inflammatory, immuno-oncology, and nonviral liver disease products. However, Gilead arguably lacks a competitive edge in all of these key areas -- an issue that sorely needs to be addressed by the next CEO.
It's not all gloom and doom for Gilead, though. Far from it. Gilead does have a whopping $30.8 billion of cash and investments in the bank that should allow the incoming CEO to right the ship in a hurry. The current biotech landscape, after all, is brimming with promising takeover targets. Moreover, Gilead's stock isn't exactly expensive based on its forward-looking price-to-earnings ratio of 10.2 right now. So, with the right person at the helm, there's good reason to think that this biotech titan could turn out to be a bargain at these levels.