Gilead Sciences Buys Immuno-Oncology Company Forty Seven Inc

Gilead Sciences has announced that it will buy Forty Seven Inc for $4.9 billion.¹

The Foster City, California-based company has agreed to pay $95.50 per share in cash for Forty-Seven Inc, adding the 5-year old biotechnology company to bolster its portfolio of oncology drugs through its blood cancer medicine, which is expected to be on the market within 2 years.¹

The transaction is expected to deepen Gilead’s pipeline of cancer drugs through Forty-Seven’s lead drug. Magrolimab is a monoclonal antibody in the clinic for several cancers—including myelodysplastic syndrome, acute myeloid leukemia, and diffuse large B-cell lymphoma—and targets CD47.^1,2

The deal complements the portfolio of Kite Pharma Inc, a company that Gilead acquired for $12 billion in 2017, according to Reuters.³

“This agreement builds on Gilead’s presence in immune-oncology and adds significant potential to our clinical pipeline,” said Daniel O’Day, chairman and chief executive officer of Gilead Sciences, in a press release.¹ “With a profile that lends itself to combination therapies, magrolimab could potentially have transformative benefits for a range of tumor types. We are looking forward to working with the highly experienced team at Forty Seven to help patients with some of the most challenging forms of cancer.”

O’Day mentioned earlier this week that there will be more deals similar to the size and scope of Forty Seven, despite calls by some analysts to buy a larger, established company that would immediately boost sales and profit, according to The Wall Street Journal.⁴

“At the end of the day, there’s no immediate quick fix in this industry,” O’Day said in an interview with The Wall Street Journal.⁴ “Myself and the board are firmly committed to the long-term strategy of the company.”

Gilead saw $22.45 billion in sales in 2019 and this year, sales are projected to decline 0.2% to $22.4 billion. Therefore, some analysts are convinced that Gilead’s deal will not have an immediate impact on the company’s bottom line.⁴

“The deal is in line with the strategy CEO Daniel O’Day had laid out earlier in the year, but I think he and his management need to do something more impactful,” Evan Seigerman, analyst for Credit Suisse, told The Wall Street Journal. Seigerman refers to a mandate made earlier in 2019 by O’Day to jumpstart sales growth and turn around Gilead’s stock price, which has seen a decline.⁴

“The company should have undertaken a more transformative approach to [mergers and acquisitions] in acquiring an asset or company that would have impacted revenue and earnings growth over the next couple of years,” Seigerman noted.⁴

Gilead’s stock is up approximately 16% in 2020 following the potential of the company’s experimental drug remedesivir to treat the COVID-19 virus. It is currently running trials in China as well as the United States.^1,4

References

• Terry, Mark. Gilead to Acquire Immuno-Oncology Company, Forty Seven, for $4.9 Billion. Biospace website. Published March 2, 2020. https://www.biospace.com/article/gilead-buys-forty-seven-for-4-9-billion/. Accessed March 5, 2020.
• Gilead to Acquire Forty Seven for $4.9 Billion [news release]. Foster City, CA. Gilead website. Published March 2, 2020. https://www.gilead.com/news-and-press/press-room/press-releases/2020/3/gilead-to-acquire-forty-seven-for-49-billion. Accessed March 4, 2020.
• Mishra, Manas. Gilead buys Forty Seven for $4.9 billion to bolster cancer drug pipeline. Published March 2, 2020. https://www.reuters.com/article/us-forty-seven-m-a-gilead-sciences/gilead-buys-forty-seven-for-4-9-billion-to-bolster-cancer-drug-pipeline-idUSKBN20P1PX. Accessed March 5, 2020.
• Walker, Joseph. Gilead Sciences to Buy Forty Seven for $9 Billion. The Wall Street Journal. Published March 2, 2020. https://www.wsj.com/articles/gilead-science-to-buy-forty-seven-for-4-9-billion-11583152471. Accessed March 5, 2020.