Gilead Sciences, a research-based bio pharmaceutical company, recently announced that it will be buying Canada’s BioSciences, Inc. for access to a second experimental drug for treating a rare immune and blood cell disorder.
Gilead said this new venture will cost the company about $510 million.
According to NASDAQ, shares for Gilead closed down 0.14 percent at $76.23, while YM BioSciences’ U.S listed shares closed up 77 percent at $2.88 – just under offer price of Gilead. CYT387, the only drug provided by YM BioSciences, is being tested on patients who have myelofibrosis, a blood disorder which has limited treatment options.
Alternately, Gilead is also conducting the mid-stage testing of its own drug for this blood and immune cell disorder. With this view, Gilead is planning to buy YM’s experimental drug for the blood disorder at a cost of $510 million.
Company officials reported that they’ll begin the important late-stage clinical testing of CYT387 by the second half of 2013.
On the news of Gilead buying YM BioSciences to have access to the blood disorder drug formulated by the latter, shares of Incyte Corp, which sells the only approved drug for treating myelofibrosis, closed down 6 percent at $16.75.
During the months of July to September, Incyte Corp bagged $43.7 million from the sale of Jakafi, the only approved treatment drug for myelofibrosis in the United States.
In the year 2010, YM BioSciences bagged the experimental drug CYT387 with its acquisition of an Australian bio pharmaceutical company, Cytopia Limited. Now, it’s time for Gilead to acquire YM for the treatment drug for the rare blood and immune cell disorder.
Christian Glennie, research analyst in Edison Investment, said it is a profitable outcome for YM as they bought the drug at a relatively modest price, and now Gilead is buying it at $510 million. At the same time, this acquisition is a perfect fit for Gilead’s strategy to broaden its medicine portfolio – especially in oncology.
Gilead reported that it will pay $2.95 per share of YM BioSciences, and plans to fund the new acquisition with cash. The deal would be finalized at $465 million based on the outstanding shares of YM, excluding the options.
As of September 30, 2012, YM featured short-term and cash deposits of $125.5 million Canadian, as stated in a filing. In this context, Brian Abrahams, Wells Fargo Securities analysts, said that despite the valuation coming less than $4-5 fair value assumed for YM, there’s a lower probability of any other party entering with a higher bid.
It is expected that the transaction will be closed by the first quarter of 2013, after which Gilead will start with its later-stage clinical testing of CYT387 drug.
Gilead Sciences is a research-based bio pharmaceutical company that discovers, manufactures and markets innovative medicines in the areas of rare or unfulfilled medical needs.
Edited by Braden Becker