Gilead to buy Kite for $12bn

Global pharmaceutical giant Gilead Sciences — which has a major presence in Cork — agreed to buy Kite Pharma in a nearly $12bn (€10bn) deal, writes Natalie Grover and Michael Erman.

The deal comes as Gilead, with around 250 people employed in Carrigtwohill in Cork as well as thousands around the world, looks to replace flagging sales from hepatitis C drugs with an emerging and expensive class of cancer immunotherapies that are expected to generate billions of dollars in revenue.

Santa Monica, California-based Kite is developing chimeric antigen receptor T-cell therapy, known as a CAR T, which harnesses the body’s own immune cells to recognize and attack malignant cells.

Gilead will pay $180 per share in an all-cash deal, representing a 29% premium over Kite’s Friday close. Kite’s shares rose 28% while Gilead’s shares rose almost 3% on foot of the deal.

Recent breakthroughs convinced Gilead’s management that they needed to buy a company developing CAR T treatments.

Gilead’s growth has been fuelled by its pricey but revolutionary hepatitis C drugs but with fewer eligible patients and rising competition, sales have begun to fall.

Second-quarter sales of its hepatitis C drugs — Sovaldi, Harvoni and Epclusa — totalled $2.9bn, down from $4bn a year earlier.

Kite is one of the leading players in the emerging field of CAR T, and is competing with rivals Novartis AG, Juno Therapeutics Inc and Bluebird Bio Inc in a race to get the first approved therapy. If approved, these drugs are expected to cost up to $500,000 and generate billions of dollars in sales. Success would also help advance a cancer-fighting technique that scientists have been trying to perfect for decades.

The US Food and Drug Administration is expected to decide by the end of November whether to approve Kite’s CAR T, axi-cel, for treatment of adults with advanced lymphoma.

Wall Street and Gilead shareholders have long been expecting Gilead to use its cash pile for a big-ticket acquisition. Gilead is hoping the deal, expected to close in the fourth quarter, repeats the success of its 2011 purchase of Pharmasset.

That deal allowed Gilead, then the world’s largest maker of HIV drugs, to move into hepatitis C treatments. Last year, just under half of Gilead’s $30bn in sales came from hepatitis C treatments.

Reuters and Irish Examiner staff