Gilead Goes Big, Pays $11.9 Billion for This SoCal CAR-T Biopharma

Gilead Goes Big, Pays $11.9 Billion for This SoCal CAR-T Biopharma
August 28, 2017
By Alex Keown, Breaking News Staff

FOSTER CITY, Calif. – After months of waiting to see a big transformative M&A deal, Gilead finally pulled the trigger and struck a deal to acquire Santa Monica, Calif,-based Kite Pharma for about $11.9 billion.

The deal propels hepatitis C drug developer Gilead into the booming world of immuno-oncology as the company known for its HCV and HIV drugs gets its hands on CAR-T treatments. Kite’s CAR-T therapy coupled with that company’s manufacturing capabilities and “portfolio of next-generation technologies and therapy candidates” will serve as a foundation for Gilead’s efforts to build an industry-leading cell therapy franchise, the Foster City-based company said in its announcement this morning.

In May, Kite received priority review from the U.S. Food and Drug Administration (FDA) for its CAR-T treatment, axicabtagene ciloleucel. The FDA is set to make a decision on Nov. 29 for the treatment of patients with refractory aggressive non-Hodgkin lymphoma (NHL).

Gilead has been sitting on a large stockpile of cash, some estimate at more than $30 billion, to use in a major acquisition. Analysts have been expecting the company to make a move for nearly a year while revenues from its HCV platform have been dwindling – in part due to the efficacy of the drugs. About half of the company’s revenue comes from its HCV franchise.

News of the acquisitions sent shares of Kite soaring nearly 30 percent higher in premarket trading this morning. Shares of Kite, which closed Friday at $139.10 were trading at $179.60 in early trading. Shares of Gilead were up slightly in early trading, hitting $74.47, up from Friday’s close of $73.79. Gilead’s $12 billion deal sets stock prices at $180 per share for the transaction.

“The acquisition of Kite establishes Gilead as a leader in cellular therapy and provides a foundation from which to drive continued innovation for people with advanced cancers,” John Milligan, Gilead’s president and chief executive officer said in a statement. “The field of cell therapy has advanced very quickly, to the point where the science and technology have opened a clear path toward a potential cure for patients. We are greatly impressed with the Kite team and what they have accomplished, and share their belief that cell therapy will be the cornerstone of treating cancer. Our similar cultures and histories of driving rapid innovation in order to bring more effective and safer products to as many patients as possible make this an excellent strategic fit.”

In February, Kite’s late-stage candidate wowed when it met its primary endpoints. Kite said the ZUMA-1 study showed 82 percent of the 101 patients who received a single infusion of the drug saw the tumors shrink by half. The company said the results of the study show how effective the CAR-T therapy is for a patient population with multiple types of aggressive NHL, including diffuse large B-cell lymphoma (DLBCL), as well as primary mediastinal B-cell lymphoma (PMBCL) and transformed follicular lymphoma (TFL).

Arie Belldegrun, president and CEO of Kite, said this is a year of milestones for Kite Pharma. It started with the Phase III data and has continued with the acquisition and possible approval of its NHL treatment. He said CAR-T treatments have the potential to become “one of the most powerful” cancer treatments available for hematologic cancer. Becoming part of Gilead will allow Kite to accelerate its pipeline and logistics approach to brining axicabtagene ciloleucel to patients. Kite also has additional candidates in clinical trials in both hematologic cancers and solid tumors, including KITE-585, a CAR T therapy candidate that targets BCMA expressed in multiple myeloma.

“Each and every accomplishment is a reflection of the talent that is unique to Kite. We are excited that Gilead, one of the most innovative companies in the industry, recognized this value and shares our passion for developing cutting-edge and potentially curative therapies for patients,” Belldegrun said in a statement.

While Kite will become part of Gilead, the immuno-oncology R&D will continue to be run from southern California. In addition to the pending FDA review, Kite has also sought clearance in Europe. A review from the European Medicines Agency is expected later this year.

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