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Gilead to buy cancer drugmaker Immunomedics in $21 billion deal – CNBC

A scientist at Gilead Sciences analyzes patient antibody levels at the Gilead laboratory in Foster City, California.

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Gilead Sciences will acquire biotech company Immunomedics in a $21 billion deal that will expand Gilead’s availability of cancer treatments, the companies announced on Sunday. 

The deal will provide Gilead access to the drug Trodelvy, an FDA-approved treatment for metastatic triple-negative breast cancer.

Gilead said it will acquire Immunomedics for $88 per share in cash. The offer will be funded through about $15 billion in cash on hand and $6 billion in newly issued debt. The transaction is anticipated to close in the fourth quarter of 2020, according to the statement. 

“This acquisition represents significant progress in Gilead’s work to build a strong and diverse oncology portfolio,” Gilead Chief Executive Daniel O’Day said in a statement. 

“Trodelvy is an approved, transformational medicine for a form of cancer that is particularly challenging to treat,” O’Day said. “We will now continue to explore its potential to treat many other types of cancer, both as a monotherapy and in combination with other treatments.” 

Immunomedics has a market value of roughly $10 billion after the company’s shares nearly doubled this year. 

The deal comes as Gilead’s hepatitis C business has struggled in recent years and its overall sales have fallen as the coronavirus pandemic weakens demand for some drugs. Gilead’s sales fell 10% during the second quarter to $5.1 billion. 

In recent years, biotech companies have pushed deep into cancer treatments. According to the World Health Organization, cancer is the second leading cause of death globally, killing nearly 10 million people in 2018.

Gilead has also recently turned its attention to the pandemic. In May, the Food and Drug Administration granted Gilead’s antiviral drug remdesivir an emergency use authorization, allowing hospitals and doctors to use the drug on patients hospitalized with Covid-19 even though the drug has not been formally approved by the agency. The intravenous drug has helped shorten the recovery time of some hospitalized patients.

It is currently developing an inhaled version of the drug, which it will administer through a nebulizer, a delivery device that can turn liquid medicines into mist.

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Gilead Sciences

Gilead Sciences Stock Drops as Latest Data on Coronavirus Drug Not Good Enough – Barron’s


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Photograph by ULRICH PERREY/POOL/AFP via Getty Images

Gilead Sciences
stock is falling following the latest data from its trials of remdesivir in patients with Covid-19.

Gilead said that in its late-stage clinical trials of remdesivir in patients who were moderately ill with Covid-19, those taking the broad-spectrum antiviral medication for five days were 65% more likely to show clinical improvement, compared with those receiving standard care. However, no statistically significant improvement showed in patients taking a 10-day course of the medicine.

At the end of April, Gilead released a report showing improvement in patients taking remdesivir in a government-funded trial, although a different study in China did not yield similar results. A day later, the Food and Drug Administration authorized the emergency use of the drug for Covid-19.

It’s been a wild ride for Gilead stock, as hopes for remdesivir, created to fight ebola, wax and wane. Although the shares, up nearly 20% year-to-date through Friday’s close, jumped on hopes that it could deliver an effective coronavirus treatment regimen, many analysts warned that bulls had gotten ahead of themselves, especially as the company wasn’t profiting from the drug yet. Yet others balanced estimates of what Gilead might charge for a treatment against potential supply shortages.

Some recent estimates peg the drug’s sale at $1.1 billion this year, which has some analysts more hopeful about potential continued gains for the stock.

Disappointment among bulls looking for more solidly upbeat news in the most recent trial may be contributing to today’s slide. While the improvement in patients on the five-day course of treatment was positive, the results weren’t as overwhelming as some might have hoped, and the lack of benefit to the ten-day treatment cohort clouded the picture even more.

As Jefferies’ Michael Yee notes, “consensus already understands remdesivir is not a silver bullet.” That said, with a “statistically significant positive (but modest) result,” bulls and bears are likely to be able to pull what they like from the report.

Evercore ISI’s Umer Raffat notes that “a fair amount of critical data has not been disclosed just yet,” which could also be tempering reaction to the trail results—especially, he notes as the primary endpoint was changed from patients discharged after two weeks to improvement after 10 days.

At this point, a good deal of investor sentiment was already focused back again on the hunt for a vaccine. In addition, the most recent Gilead data is for moderately ill patients, i.e. those most likely to survive anyway. That’s less dramatic than a headline about the drug helping the patients most in danger, and while remdesivir will likely continue to be used in the fight against Covid-19, those wary that Gilead’s shares already reflected too much optimism may feel less inclined to stick around.

Gilead was down 3.9% at $74.79 at 11:02 a.m., while the S&P 500 was off up 0.1%, and the Dow Jones Industrial Average has ticked up 34.18 points, or 0.1%. The iShares Nasdaq Biotechnology ETF (IBB) has declined 0.5%.

Write to Teresa Rivas at teresa.rivas@barrons.com

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