Gilead Sciences to Acquire Kite Pharma for $11.9 Billion in Landmark CAR-T Deal

On August 28, 2017, Gilead Sciences announced a major development: the company would acquire immunotherapy firm Kite Pharma for $11.9 billion. The acquisition price of $180 per share represented a 29.4% premium over Kite Pharma’s closing stock price from the previous Friday.

Gilead Sciences, founded in 1987 and headquartered in California, is a research-based biopharmaceutical company engaged in the development and marketing of pharmaceutical products. The company’s key therapeutic areas include human immunodeficiency virus (HIV)/AIDS and liver diseases.

Sovaldi, the breakthrough drug for treating chronic hepatitis C, has been a veritable cash cow for Gilead Sciences, with sales reaching an astonishing $5.8 billion in the first half of 2014. Gilead Sciences also submitted a marketing application for the drug in China in February 2017.

Sovaldi was launched in the United States in December 2013 and has been the focus of industry attention since its inception. Its pricing of $84,000 per course of treatment ($1,000 per tablet) has also been widely controversial. However, due to the small patient population and the exorbitant price of $1,000 per tablet, Sovaldi gradually lost its competitive edge in the market, leading to a decline in sales.

Wall Street and Gilead Sciences shareholders have long hoped that the company would leverage its cash reserves to execute large-scale acquisitions, thereby injecting new vitality into the business and revitalizing its sales performance.

Kite Pharma, founded in 2009, is a leading company in the CAR-T field. Its flagship product is chimeric antigen receptor (CAR)-T cell immunotherapy, which enhances the body’s own immune cells to recognize and attack cancer cells.

In the first half of 2017, the most landmark event in the field of cellular immunotherapy was the unanimous recommendation of Novartis’ CAR-T therapy by the FDA advisory committee. The 10:0 vote undoubtedly served as a major boost to the entire cellular immunotherapy sector.

In fact, Kite Pharma had originally held a leading position in its competition with Novartis. Unfortunately, however, one patient death occurred in late April involving Kite Pharma’s KTE-C19. Nevertheless, Kite Pharma’s CAR-T therapy has also entered the FDA review stage.

Analysts predict that if Kite Pharma’s CAR-T therapy is approved by the FDA, its price could reach approximately $500,000, generating billions of dollars in revenue for the company.

Kite Pharma began trading suspension this Monday, with its stock price rising 16.46% prior to the halt; Gilead Sciences’ stock price increased by 2.7%.

According to VCBeat, the transaction has been approved by the boards of directors of both companies and is expected to be completed in the fourth quarter of this year.