The Long YM Bio Nightmare Has Ended -- Happily.

FOSTER CITY, Calif. (TheStreet) --Gilead Sciences (GILD) is buying YM Biosciences (YMI) for $510 million in cash, adding another experimental drug to its growing blood-related cancer portfolio.

The Gilead acquisition values YM Bio at $2.95 per share, or an 81% premium to the stock's closing price Wednesday.

YM Bio's lead drug is CYT387, an oral JAK inhibitor under development as a treatment for myelofibrosis. Gilead intends to begin a phase III study of CYT387 in the second half of 2013, pending the close of the acquisition.

Gilead is known for its HIV and hepatitis C drugs but has also been developing a cancer drug pipeline that receives less attention. The company's lead cancer drug is idealisib (formerly GS-1101), a PI3K inhibitor currently in five phase III studies for chronic lymphocytic leukemia and non-Hodgkin's lymphoma. A second Gilead drug is in mid-stage studies for a variety of cancer indications.

The purchase of YM Bio is a happy ending to what's been a long and frustrating story for the company's shareholders. Data from mid-stage studies have long suggested CYT387 could be a superior treatment for myelofibrosis compared to Incyte's (INCY) Jakafi. Unfortunately, investors never seemed to give YM Bio much credit for CYT387.

Until Wednesday, YM Bio's management team had done little to bolster the credibility of CYT387 by dragging its feet on moving the drug into phase III studies.

-- Reported by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.