Gilead Finally Pulls Trigger on Acquisition

Working through growth concerns, biotechnology company Gilead Sciences finally did what everyone was waiting for them to do: make an acquisition. The target is Kite Pharma for which Gilead will pay $11 billion to acquire.

Kite’s value is tied to a new cancer treatment that could soon be available in the United States and Europe called CAR-T. It works by genetically modifying a persons own T-cells to better attack and control certain cancers. Analysts think that within five years the treatment could bring $1.7 billion in sales.

Gilead came to prominence by developing the most effective drugs for treating HIV, a franchise still very much in tact at the company. In 2011 Pharmasset was acquired for $11 billion in order to gain access to its treatments for Hepatitis C while those treatments were still seeking approval. The acquisition was a home run. Gilead’s Hepatitis C business did $19 billion in 2015. However, a backlash over high prices and the one time nature of the treatment means that that portion of Gilead’s business is in decline. Last year, it did only $15 billion in annual revenue.

Gilead Sciences revenue by division.

The deal should close in the fourth quarter – the same time when Kite’s cancer treatment is expected to receive final approval.

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