By Stuart Biggs, Bloomberg
Gilead Sciences Inc. agreed to buy US cancer-focused biotech Arcellx Inc. for as much as $7.8 billion as it seeks to boost its drug pipeline.
Gilead, which owns 11.5% of Arcellx’s outstanding stock, will pay $115 per share in cash, with a contingent payment of $5 per share dependent on future sales, it said Monday. The price is almost double Arcellx’s Friday closing price.
Shares of Arcellx rose 78% at 9:32 am in New York, while Gilead’s stock slipped about 1%.
California-based Gilead is hunting for deals to expand beyond its focus on antiviral medicine into cancer and other disease areas, after forecasting full-year sales that fell short of analyst estimates this month.
Arcellx is developing a new class of immunotherapies for patients with cancer and other incurable diseases. The two companies already have a collaboration to develop and commercialize a potentially promising treatment known as anito-cel for patients with multiple myeloma, a rare blood cancer.
Despite treatment advances, many patients with multiple myeloma eventually relapse and need new lines of therapy. The US Food and Drug Administration is expected to make a decision on anito-cel by Dec. 23, Gilead said.
The deal will give Gilead full rights to the promising cell therapy drug that could compete against Johnson & Johnson’s Carvykti drug, with a potentially better side-effect profile, Brian Abrahams, an analyst at RBC Capital Markets, said in a note to clients.
The purchase “makes some strategic sense,” wrote Abrahams. “Financially, the deal looks fairly neutral” for Gilead.
The Arcellx transaction is expected to close in the second quarter, is expected to boost Gilead’s earnings in 2028 if anito-cel is approved.
Gilead’s HIV franchise remains the biggest part of its business, and Wall Street is heavily focused on the prospects for its long-acting prevention drug Yeztugo. Approved in June, it’s a shot that can be given just twice a year. The company expects sales of the drug to reach $800 million this year.
Still, Gilead executives have made it clear the company is hunting for deals. “We very much want to continue to add to our pipeline with appropriate M&A,” Chief Executive Officer Daniel O’Day said on an earnings call in February. Shares of Gilead were up more than 23% this year through Friday’s close.
Gilead struck a deal with President Donald Trump in December to lower the price of some of its medicines in exchange for a three-year reprieve on threatened tariffs.
–With assistance from Subrat Patnaik, Gerry Smith and Robert Langreth.
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