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Gilead Partners with Scholar Rock for Fibrotic Disease Drugs

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Gilead Sciences, Inc. (GILD - Free Report) announced that it entered into a strategic collaboration with clinical-stage biopharmaceutical company Scholar Rock Holding Corp. (SRRK - Free Report) to discover and develop highly specific inhibitors of transforming growth factor beta (TGFβ) activation for the treatment of fibrotic diseases.

Financial Value of the Transaction

Scholar Rock will receive $80 million in upfront payments, comprised of $50 million cash and $30 million purchase of Scholar Rock Holding Corporation common stock. Gilead will also pay Scholar Rock a one-time milestone payment of $25 million upon the successful completion of specific preclinical studies and be eligible to receive up to an additional $1,425 million in potential payments aggregated across all three programs based on the successful achievement of certain research, development, regulatory and commercialization milestones.

In addition, Scholar Rock would also receive high single-digit to low double-digit tiered royalties on sales of potential future products originating from the collaboration.

Strategic Value of the Transaction 

Per the agreement, Gilead obtained exclusive options to license worldwide rights to product candidates that emerge from three Scholar Rock TGFβ programs — inhibitors targeting activation of latent TGFβ1 with high affinity and specificity, inhibitors selectively targeting activation of latent TGFβ1 localized to extracellular matrix, and a third TGFβ discovery program.

On the other hand, Scholar Rock is responsible for antibody discovery and preclinical research through product candidate nomination. If Gilead chooses to exercise the option, the company will be responsible for the program’s preclinical and clinical development and commercialization.

Scholar Rock retains exclusive worldwide rights to discover, develop and commercialize certain TGFβ inhibitors for oncology and cancer immunotherapy. Moreover, Scholar Rock would also receive high-single-digit to low-double-digit tiered royalties on sales of potential future products originating from the collaboration.

Our Take

Gilead is making efforts to develop its pipeline in the fibrotic disease sphere, which includes non-alcoholic steatohepatitis (NASH) and diabetic kidney disease.

Gilead’s stock has lost 8.8% in the past six months compared with the industry's decline of 20.1%.

 

Gilead was once a market outperformer, with its strong HCV franchise boasting a number of blockbuster drugs. However, the HCV franchise has been under pressure since the last three-four years due to competitive pressure from the likes of AbbbVie, Inc. (ABBV - Free Report) .

Consequently, Gilead had shifted focus on its HIV franchise and newer avenues like CAR-T therapy.

Gilead has been trying to revive its portfolio of late. Gilead has promising late-stage candidates — selonsertib and filgotinib — in the NASH and inflammation markets. The company also has a collaboration agreement with Sangamo Therapeutics, Inc. (SGMO - Free Report) to use Sangamo’s zinc finger nuclease technology platform for the development of next-generation ex vivo cell therapies in oncology.

Zacks Rank

Gilead currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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