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Gilead (GILD) to Buy CBAY for $4.3B, Add PBC Drug to Pipeline
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Gilead Sciences, Inc. (GILD - Free Report) announced that it will acquire clinical-stage biopharmaceutical company, CymaBay Therapeutics, Inc. , for $32.50 per share in cash or a total equity value of $4.3 billion.
Shares of CBAY surged 25.8% on the acquisition news as the offer price represents 27% of the company’s closing share price as of Feb 9, 2024.
Financial Terms of the Acquisition
A wholly-owned subsidiary of Gilead will commence a tender offer to acquire all the outstanding shares of CymaBay’s common stock at the price offered.
GILD will acquire all remaining shares not tendered in the offer through a second-step merger at the same price as in the tender.
The acquisition, approved by both Gilead and CymaBay’s boards of directors, is expected to be closed in the ongoing quarter, subject to regulatory approvals and other customary closing conditions.
Strategic Value of the Acquisition
The acquisition will add CymaBay’s investigational lead product candidate, seladelpar, to Gilead’s pipeline.
Seladelpar is an investigational, oral, selective peroxisome proliferator-activated receptor delta agonist, shown to regulate critical metabolic and liver disease pathways.
A new drug application seeking approval of the candidate for the treatment of primary biliary cholangitis (PBC) was submitted to the FDA in December 2023. The FDA granted priority review to the same with a target action date of Aug 14, 2024.
The FDA has also granted the Breakthrough Therapy Designation to seladelpar for the treatment of PBC, including pruritus in patients without cirrhosis or with compensated cirrhosis. The candidate also enjoys an orphan drug status in the United States and Europe for the treatment of patients with PBC.
A potential approval will boost Gilead’s revenue growth. The transaction is likely to be neutral to Gilead’s bottom line in 2025 and significantly accretive thereafter.
Gilead Sciences, Inc. Price, Consensus and EPS Surprise
The acquisition will complement Gilead’s liver disease portfolio, which comprises chronic hepatitis C virus and chronic hepatitis delta virus treatments. The potential approval of seladelpar will generate an incremental stream of revenues for the company, given the market potential.
An acquisition announcement was on the cards as Gilead has been looking to bolster its portfolio/pipeline since growth in its legacy HIV business slowed down and it suffered a few pipeline setbacks.
However, the stock rose only 1.06% on the news as investors probably deemed the deal to be expensive. It fell 6.8% in the past six months compared with the industry's decline of 1.3%.
Image Source: Zacks Investment Research
The company has been striving hard to expand its oncology franchise through acquisitions and strategic collaborations. The acquisition of Immunomedics added Trodelvy, a first-in-class antibody-drug conjugate, to GILD’s portfolio. The drug, approved for advanced breast cancer, witnessed a strong uptake in 2023.
However, Gilead’s efforts to boost the drug’s label were hit after the late-stage study evaluating Trodelvy in previously treated metastatic non-small cell lung cancer failed.
Additionally, the phase III OAKTREE study of obeldesivir in non-hospitalized participants without risk factors for developing severe COVID-19 did not meet its primary endpoint of improvement in time to symptom alleviation.
The FDA also placed a full clinical hold on all the clinical trials of magrolimab for myelodysplastic syndromes and acute myeloid leukaemia (AML).
Consequently, Gilead discontinued the late-stage ENHANCE-3 clinical trial of magrolimab in AML patients.
Mergers & acquisition deals have intensified in the pharma/biotech space of late as pharma and biotech bigwigs look to diversify their portfolios in the wake of generic competition for key drugs.
Bristol Myers (BMY - Free Report) acquired Mirati Therapeutics for a total equity value of $4.8 billion. The acquisition added the approved lung cancer drug Krazati to the company’s oncology portfolio.
Bristol Myers is all set to acquire Karuna Therapeutics, Inc., which is developing drugs for psychiatric and neurological conditions. The company also announced that it is set to acquire RayzeBio, Inc., a clinical-stage radiopharmaceutical therapeutics company.
Last week, Novartis (NVS - Free Report) announced that it will acquire the Germany-based global biopharmaceutical company, MorphoSys AG, to expand its oncology portfolio.
The acquisition will add late-stage candidate, pelabresib (CPI-0610), to NVS’ pipeline.
Image: Shutterstock
Gilead (GILD) to Buy CBAY for $4.3B, Add PBC Drug to Pipeline
Gilead Sciences, Inc. (GILD - Free Report) announced that it will acquire clinical-stage biopharmaceutical company, CymaBay Therapeutics, Inc. , for $32.50 per share in cash or a total equity value of $4.3 billion.
Shares of CBAY surged 25.8% on the acquisition news as the offer price represents 27% of the company’s closing share price as of Feb 9, 2024.
Financial Terms of the Acquisition
A wholly-owned subsidiary of Gilead will commence a tender offer to acquire all the outstanding shares of CymaBay’s common stock at the price offered.
GILD will acquire all remaining shares not tendered in the offer through a second-step merger at the same price as in the tender.
The acquisition, approved by both Gilead and CymaBay’s boards of directors, is expected to be closed in the ongoing quarter, subject to regulatory approvals and other customary closing conditions.
Strategic Value of the Acquisition
The acquisition will add CymaBay’s investigational lead product candidate, seladelpar, to Gilead’s pipeline.
Seladelpar is an investigational, oral, selective peroxisome proliferator-activated receptor delta agonist, shown to regulate critical metabolic and liver disease pathways.
A new drug application seeking approval of the candidate for the treatment of primary biliary cholangitis (PBC) was submitted to the FDA in December 2023. The FDA granted priority review to the same with a target action date of Aug 14, 2024.
The FDA has also granted the Breakthrough Therapy Designation to seladelpar for the treatment of PBC, including pruritus in patients without cirrhosis or with compensated cirrhosis. The candidate also enjoys an orphan drug status in the United States and Europe for the treatment of patients with PBC.
A potential approval will boost Gilead’s revenue growth. The transaction is likely to be neutral to Gilead’s bottom line in 2025 and significantly accretive thereafter.
Gilead Sciences, Inc. Price, Consensus and EPS Surprise
Gilead Sciences, Inc. price-consensus-eps-surprise-chart | Gilead Sciences, Inc. Quote
Our Take
The acquisition will complement Gilead’s liver disease portfolio, which comprises chronic hepatitis C virus and chronic hepatitis delta virus treatments. The potential approval of seladelpar will generate an incremental stream of revenues for the company, given the market potential.
An acquisition announcement was on the cards as Gilead has been looking to bolster its portfolio/pipeline since growth in its legacy HIV business slowed down and it suffered a few pipeline setbacks.
However, the stock rose only 1.06% on the news as investors probably deemed the deal to be expensive. It fell 6.8% in the past six months compared with the industry's decline of 1.3%.
Image Source: Zacks Investment Research
The company has been striving hard to expand its oncology franchise through acquisitions and strategic collaborations. The acquisition of Immunomedics added Trodelvy, a first-in-class antibody-drug conjugate, to GILD’s portfolio. The drug, approved for advanced breast cancer, witnessed a strong uptake in 2023.
However, Gilead’s efforts to boost the drug’s label were hit after the late-stage study evaluating Trodelvy in previously treated metastatic non-small cell lung cancer failed.
Additionally, the phase III OAKTREE study of obeldesivir in non-hospitalized participants without risk factors for developing severe COVID-19 did not meet its primary endpoint of improvement in time to symptom alleviation.
The FDA also placed a full clinical hold on all the clinical trials of magrolimab for myelodysplastic syndromes and acute myeloid leukaemia (AML).
Consequently, Gilead discontinued the late-stage ENHANCE-3 clinical trial of magrolimab in AML patients.
Mergers & acquisition deals have intensified in the pharma/biotech space of late as pharma and biotech bigwigs look to diversify their portfolios in the wake of generic competition for key drugs.
Bristol Myers (BMY - Free Report) acquired Mirati Therapeutics for a total equity value of $4.8 billion. The acquisition added the approved lung cancer drug Krazati to the company’s oncology portfolio.
Bristol Myers is all set to acquire Karuna Therapeutics, Inc., which is developing drugs for psychiatric and neurological conditions. The company also announced that it is set to acquire RayzeBio, Inc., a clinical-stage radiopharmaceutical therapeutics company.
Last week, Novartis (NVS - Free Report) announced that it will acquire the Germany-based global biopharmaceutical company, MorphoSys AG, to expand its oncology portfolio.
The acquisition will add late-stage candidate, pelabresib (CPI-0610), to NVS’ pipeline.
Gilead currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.