Gilead Buying Myogen

It will pay a 50% premium.
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Updated from 7:16 a.m.

Gilead Sciences

(GILD) - Get Report

agreed to buy

Myogen

(MYOG)

for $52.50 a share in cash, or $2.5 billion, to expand its pulmonology business.

Forest City, Calif.-based Gilead will pay a 50% premium to Myogen's closing stock price Friday. The deal is expected to be dilutive to Gilead's earnings in 2007 and 2008, neutral in 2009 and accretive in 2010 and beyond.

Myogen rose 46% early Monday.

Myogen's lead product candidate, ambrisentan, for the potential treatment of pulmonary arterial hypertension (PAH), is an orally available endothelin receptor antagonist. Endothelin is a small peptide hormone that is believed to play a critical role in the regulation of blood flow and cell division.

Denver-based Myogen currently markets and distributes Flolan (epoprostenol sodium) in the U.S. through an agreement with

GlaxoSmithKline

(GSK) - Get Report

. Flolan was approved in 1995 and is indicated for the long-term intravenous treatment of primary pulmonary hypertension. Additionally, Myogen is exploring darusentan, an endothelin receptor antagonist, for the potential treatment of resistant hypertension. Myogen recently initiated a Phase III study of the product. Myogen also has a research collaboration with

Novartis

(NVS) - Get Report

focused on the identification of disease-modifying drugs for the treatment of chronic heart failure and related cardiovascular disorders.

"Myogen represents a unique scientific and strategic fit with our company, bringing to Gilead a late-stage product candidate that addresses an area of significant unmet medical need and further enhances our growing focus on pulmonology, as initially established through our recent acquisition of Corus Pharma," said Gilead CEO John C. Martin. "We are excited about the potential of ambrisentan, which we believe could have important clinical benefit over existing therapies for pulmonary arterial hypertension. We look forward to welcoming Myogen's Colorado-based employees to the Gilead team. Working together, we plan to leverage both our development capabilities and experience delivering differentiated therapeutics to the medical community to make ambrisentan available for patients in need as quickly as possible."