Gilead Sciences Inc. (NASDAQ: GILD) and Kite Pharma Inc. (NASDAQ: KITE) announced today that the two companies have entered into an agreement in which Gilead will acquire Kite for a total of $11.9 billion or $180 per share.
The deal was approved by both the Gilead and Kite boards and is expected to come to a conclusion in the fourth quarter of 2017. The transaction will provide opportunities for diversification of revenues, and is expected to be neutral to earnings by year three and accretive thereafter, according to the statement.
Gilead was once the largest maker of HIV drugs, especially its Hepatitis C drug, but due to competition and its costliness, sales for the company have begun to fall.
Kite is among the leading cell therapy in its sector. The company has developed cell therapies that use either a chimeric antigen receptor (CAR) or T cell receptor (TCR), which use the patient’s immune cells to fight the cancer. The therapy is currently under priority review by the FDA. Kite is also competing against Novartis AG, Juno Therapeutics, and Bluebird in a race to get the first approved therapy.
If approved, these drugs are expected to cost up to $500,000 and generate billions of dollars. The approval would also help advance a cancer-fighting technique that scientists have been trying to perfect for a while now, according to Reuters.
Arie Belldegrun, President and Chief Executive Officer of Kite said, “CAR T has the potential to become one of the most powerful anti-cancer agents for hematologic cancers. With Gilead’s expertise and support, we hope to fulfill that potential by rapidly accelerating our robust pipeline and next-generation research and manufacturing technologies for the benefit of patients around the world.”
“We are greatly impressed with the Kite team and what they have accomplished, and share their belief that cell therapy will be the cornerstone of treating cancer. Our similar cultures and histories of driving rapid innovation in order to bring more effective and safer products to as many patients as possible make this an excellent strategic fit.” said John F. Milligan, Gilead’s President and Chief Executive Officer.
This deal will position Gilead to become a leader in cell therapy. The deal will also help the two companies continuously deliver innovative data and results to further improve upon or even replace current products. It will also improve production and development of products.