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3 Sep 2017

Pharma M&A Case Study: Gilead Sciences’s acquisition of Kite Pharma

Gilead Sciences is in process of acquiring Kite Pharma, one of the most advanced players in the CAR-T therapy market.

In this case study we will be analyzing the reason for the acquisition and also we will look into the deal from closer perspective.

Quick Deal Summary:
Gilead Sciences will acquire Kite Pharma for $180 per share in cash or approximately $11.9 billion.

Type of Deal:
M&A

Major Objective: Gilead Looks to Boost Oncology Pipeline by acquiring Kite Pharma.

What is Gilead?

Gilead is leading innovative pharmaceutical, having top-selling hepatitis C virus (“HCV”) under their portfolio, leading by the blockbuster Solvaldi. Apart from that Gilead is also having strong presence in HIV segment.

The Kite acquisition gives Gilead a near-term opportunity with axicabtagene ciloleucel (axi-cel), which is essentially an I.V. bag full of the patient’s own immune cells that have been reprogrammed to hunt for cancer cells that display the CD19 protein on their surface.

A Look into Kite Phrama’s Portfolio

  • Kite Pharma is specialized in CAR-T therapy.
  • Axicabtagene ciloleucel (axi-cel), under priority FDA review with a response expected by Nov 29, 2017.
  • EU approval could come next year. Axi-cel is under review for the treatment of refractory aggressive non-Hodgkin lymphoma (“NHL”), which includes diffuse large B-cell lymphoma (“DLBCL”), transformed follicular lymphoma (“TFL”) and primary mediastinal B-cell lymphoma (“PMBCL”).
  • Other candidates in Kite’s pipeline include those targeting hematologic cancers as well as solid tumors.
  • Axi-cel has blockbuster potential though Novartis is currently the first company to gain approval in the U.S. for a CAR-T treatment with the FDA approving the company’s Kymriah.

Pipeline Expansion – Strengthening Oncology Portfolio

Global spending on cancer medicines is expected to surge from $107 billion in 2015 to around $150 billion in 2020.

The Kite acquisition gives Gilead a near-term opportunity with axicabtagene ciloleucel (axi-cel), which is essentially an I.V. bag full of the patient’s own immune cells that have been reprogrammed to hunt for cancer cells that display the CD19 protein on their surface. The personalized cell-based therapy works incredibly well for patients with non-Hodgkin lymphomas who have relapsed after receiving available treatments; the FDA is expected to announce its decision about the treatment’s approval by the end of November.

If approved, annual axi-cel sales are expected to around 2-3 billion, which will add substantial revenue to Gilead.

Kite’s manufacturing plants 

Gilead also will be getting access to Kite’s state of art biopharmaceutical manufacturing plan. The little biotech recently opened a plant near the Los Angeles airport that boasts a 17-day turnaround from the moment a patient’s cells are harvested until they’re back at the treatment center to be reinfused. Given that the start-up was able to tighten its turnaround time to several days faster than Novartis’, there’s a good chance it can remain competitive after it gains access to Gilead’s massive resources.

 

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