Gilead Sciences Inc. (GILD) - Get Report said it's reached a deal to buy cancer treatments specialists Immunomedics Inc. (IMMU) - Get Report for around $21 billion, sending shares in the group yo an all-time high in early Monday trading.
Gilead offered to pay $88 a share for Immunomedics Sunday, a more than 108% premium to the group's Friday closing price that would value the Morristown, New Jersey-based drugmaker at around $210 billion. Gilead said the deal, which it will finance with a mixture of cash and debt, will give it access to Immunomedics breast cancer treatment Trodelvy, which received approval from the U.S. Food & Drug Administration last spring.
Gilead and Immunomedics said the deal was unanimously approved by both company's boards and is expected to close in the fourth quarter of this year.
“This acquisition represents significant progress in Gilead’s work to build a strong and diverse oncology portfolio. Trodelvy is an approved, transformational medicine for a form of cancer that is particularly challenging to treat. 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,” said CEO Daniel O’Day. “We look forward to welcoming the talented Immunomedics team to Gilead so we can continue to advance this important new medicine for the benefit of patients with cancer worldwide.”
Immunomedics shares surged more than 103.5% higher in early trading following the Sunday agreement to change hands at an all time high of $86.00 each. Gilead shares, meanwhile, were marked 2.2% higher at $66.34 each, a move that pegs the stock close to its trading levels at the start of the year.
"Trodelvy slots neatly in GILD's oncology strategy of foundational assets (CAR-T, bispecifics, antiCD47 I/O) with good efficacy, but also good tolerability for future combinability," said Oppenheimer analyst Hartaj Singh, who carries a $105 price target with an outperform rating on Gilead shares.
"The Phase 1/2 clinical trial for which Trodelvy gained accelerated approval for mTNBC (a particularly nasty form of breast cancer) from the FDA in 2Q20 presents a compelling risk/benefit profile in a cancer with a very high unmet need," Singh added. "Additional near-term trials are ongoing in heavily pre-treated bladder cancer where the drug has demonstrated strong, albeit early efficacy."