Gilead's 'open to suggestion' on its next big M&A splash

Gilead President and COO John Milligan

On pace to reap $29 billion in revenue this year thanks to its surging hepatitis C franchise, Gilead Sciences ($GILD) has the cash to pull off a big deal or two, and management is eyeing a slew of late-stage opportunities.

The Big Biotech wowed analysts with a $7.6 billion sales quarter, good for 52% annual growth, leading to an obvious question: What's Gilead going to do with all that money? Expand its pipeline, R&D chief Norbert Bischofberger said on a conference call, pointing to "myriad external possibilities" out there on the market.

Gilead has largely shied away from big-ticket dealmaking since its $11 billion acquisition of Pharmasset--from which it acquired the then-inchoate hep C blockbusters Sovaldi and Harvoni. But, thanks in part to its bountiful cash flow, the company is now more agnostic about deal size, President and COO John Milligan said, worrying less about price than whether a target is "the right fit for Gilead."

"We typically like things where we can have impact on Phase III and where we can accelerate those products either into the approval process or into greater indications after the approval process," Milligan told analysts. "... So, we're open to suggestion--there have been many mentioned out there--but I would say that I want to stick very closely to kinds of (therapeutic) areas we're in here today."

That likely means more asset-minded deals, like Gilead's $600 million buyout of the cancer biotech Calistoga Pharmaceuticals or its $470 million partnership with the NASH-focused Phenex Pharmaceuticals.

But, walking back comments made last year, Gilead is no longer ruling out major M&A.

And, as Milligan mentioned, analysts are happy to suggest just where Gilead should direct its checkbook. Bernstein's Geoffrey Porges has urged the company to take a $45 billion plunge on Vertex Pharmaceuticals ($VRTX) to get a foothold in orphan drugs, and other analysts have pointed to NASH leader Intercept Pharmaceuticals ($ICPT), which has a market cap of roughly $6 billion.

- listen to the presentation

Suggested Articles

Preclinical-stage biotech Abpro Therapeutics wants to trial its two lead candidates for HER2-positive cancers and diabetic macular edema in 2019.

After a rough patch in 2017, the stars seem to be realigning for French CAR-T expert Cellectis, which just closed a $164 million U.S. public offering.

Investment firm Frazier Healthcare Partners has closed its 11th fund—worth $780 million—that will help established companies accelerate their growth.