Gilead strikes $4.9B Forty Seven acquisition, paying a hefty premium for cancer drug

Gilead
Gilead last bet as much on an oncology biotech when it agreed to pay $11.9 billion to acquire Kite. (Gilead China)

Gilead has struck a deal to buy Forty Seven for $4.9 billion. The takeover will give Gilead control of midphase anti-CD47 antibody magrolimab that delivered data that impressed investors late last year.

Forty Seven set up shop in 2015 to build on evidence of the role of CD47 in immune evasion that Irv Weissman and his colleagues at Stanford University generated. The evidence suggested that drugging CD47 could neutralize a key mechanism tumors use to avoid being attacked by the immune system, thereby unlocking opportunities for combination therapies in multiple indications.

In December, Forty Seven went some way toward validating its approach by revealing 50% or more of the myelodysplastic syndrome (MDS) and acute myeloid leukemia (AML) patients who took magrolimab and Celgene’s Vidaza had a complete response. 

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The data triggered a surge in Forty Seven’s stock, which went from below $15 to above $40 in two weeks. Now, the stock has climbed higher again—far higher.

Gilead’s accepted bid values Forty Seven at $95 a share. For most of its time on public markets, Forty Seven has traded below $20, dipping as low as $6 back in October. Until Bloomberg broke news of Gilead’s interest in Forty Seven last week, the stock had never breached $50.

The hefty premium will bag Gilead a drug that is being tested in a handful of indications. In addition to the aforementioned phase 2 trials in MDS and AML, Forty Seven is testing magrolimab in patients with non-Hodgkin lymphoma, diffuse large B-cell lymphoma and three solid tumor types, namely colorectal, ovarian and bladder.  

Gilead last bet as much on an oncology biotech almost three years ago when it agreed to pay $11.9 billion to acquire Kite Pharma. That takeover is yet to pay off, ratcheting up the pressure on Gilead to strike deals to support future growth. Gilead CEO Daniel O’Day thinks Forty Seven fits the bill. 

“Magrolimab complements our existing work in hematology, adding a non-cell therapy program that complements Kite’s pipeline of cell therapies for hematological cancers. With a profile that lends itself to combination therapies, magrolimab could potentially have transformative benefits for a range of tumor types,” O’Day said in a statement. 

CMO Merdad Parsey flagged up Gilead’s interest in non-cell therapy programs on a call with investors last month, stating that he was working with Kite to find “the right balance” and build up its portfolio of other modalities to complement its CAR-T assets.

Analysts at Jefferies said in a note to clients it was a good bolt-on deal: "We think magrolimab represents a likely pipeline within a product being studied in multiple indications and with promising efficacy across various cancers including MDS, AML, NHL and solid tumors." It added that the data so far for the therapy was "impressive and the drug is clearly active."

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