April 12, 2016
By Alex Keown, BioSpace.com Breaking News Staff
PALO ALTO, Calif. – Expect Gilead Sciences to be more aggressive in M&A activity following its $1.2 billion deal to snap up Cambridge, Mass.-based Nimbus Apollo, Inc. earlier this month. That’s the message from analysts at Kenra Investors, which has taken a long-term stake in Gilead.
In an article on Seeking Alpha, the analysts predict the company will expand its pipeline through aggressive M&A activity to boost revenue and create new streams in other therapeutic areas beyond the company’s dominance in the hepatitis market. Kenra analysts cited Norbert Bischofberger, Gilead’s executive vice president of research and development and chief scientific officer, who said the company is looking at other pharmaceutical and biotech companies that have therapies that have been proven to work in early clinical trials. Bischofberger said Gilead is looking at products that will not only complement its HCV and other liver drugs, but would look at other drugs outside that scope.
In its most recent move, Gilead snapped up Nimbus Apollo, Inc. for its Acetyl-CoA Carboxylase (ACC) inhibitor program in an effort to bolster the company’s pipeline for metabolic disorders and the treatment of non-alcoholic steatohepatitis (NASH)—a move to bolster the company’s existing liver disease treatment.
The Nimbus deal was something of a light snack for Gilead, Kenra said, due to the company’s cash reserves of $14 billion.
The Kenra analysts put forth an interesting breakdown of how investments should work as far as yielding returns for a company. For every $100 a company spends on an acquisition, shareholders anticipate $5.88 should come back at year’s end as a return on investment. If Gilead were to spend $12 billion this year, the company should expect $705 million to return as revenue by the end of 2016.
Gilead currently dominates the HCV market, with its two blockbuster drugs Harvoni and Sovaldi generating about $20 billion in revenue for 2015. There is concern among some investors that the gravy train of Harvoni and Sovaldi will begin to run out sooner, rather than later, particularly due to the cost of the treatments and competition from new drugs, such as Merck ’s recently approved hepatitis C drug, Zepatier. Zepatier was granted breakthrough therapy designation for the treatment of chronic HCV genotype 1 infection in patients with end stage renal disease on hemodialysis and for the treatment of chronic HCV genotype 4 infection.
While there is some competition in the HCV market, Gilead is not resting on its laurels in that area. In January, Gilead submitted a New Drug Application to the U.S. Food and Drug Administration (FDA) for tenofovir alafenamide, an investigational, once-daily treatment for adults with chronic hepatitis B virus infection. The company is also continuing to use Sovaldi in combination with other drugs, including a triplet drug comprised of Sovaldi, velpatasvir, and a protease inhibitor for the treatment of genotype 3 HCV patients. Also, in the waning days of 2015 Harvoni was approved for expanded use in patients with genotype 4, 5 and 6 chronic hepatitis C virus (HCV) infection and in patients co-infected with HIV by the FDA.
While Merck’s Zepatier will challenge Gilead’s HCV drugs in the market, the company already scored a minor hit against its rival. Gilead Sciences will pay Merck $200 million in damages for patent infringement for two lucrative hepatitis C drugs. The award is far less than the almost $3 billion Merck was initially seeking. Merck will share a portion of that $200 million with Carlsbad, Calif.-based Ionis Pharmaceuticals , which owns the patents in partnership with Merck.
