The morningâ€™s other big M&A news comes out of the Bay Area biotech industry, where Gilead Sciences announced that it will purchase CV Therapeutics for $1.4 billion. The sudden move frees Palo Alto-based cardiovascular company CV Therapeutics from the hostile embrace of Astellas Pharma, ending a messy $1.1 billion takeover attempt. With the acquisition, Gilead, which has rocketed to glory with an arsenal of market-leading HIV drugs, extends its reach into the heart-disease realm, where many blockbusters-to-be from Pfizer, Merck, and other giants have recently come to grief.
Gilead, the Foster City, CA, powerhouse will pay cash for the deal.
In A conference call, Gilead CEO John Martin, COO John Mulligan, and R&D wizard Norbert Bischogberger had to deal with a fair amount of skepticism from industry analysts, who poked and prodded with questions about the deal, aiming to find its vulnerable spots. And there are several.
From CV Therapeutics, Gilead gets two marketed products: Ranexa, a $100 million seller in chronic angina; and Lexiscan, a $50 million drug for mycocardial perfusion imagingâ€”plus a pipeline including two Phase III molecules for atrial-fibrillation molecule and heart failure.
Analysts asked whether Gilead was placing too big a bet on two hopes: that Ranexa, with a new label for first line treatment, will grab a major piece of the angio market; and that the platform will indeed deliver. The biotech is also banking on its own Phase III compound, darusentan, for persistent hypertension. In addition, CV Therapeutics sales force nicely expands Gileadâ€™s access to cardio specialists. If everything works out as planned, the innovative specialty drugmaker could find itself leading in the blockbuster-making primary-care market. That would be a truly remarkable accomplishment.
Under tough questioning, the Gilead team stuck to their guns, proclaiming complete confidence in both their planned relaunch of Ranexa and the approval of darusentan in the competitive hypertension field, where other brave new molecules have failed.
Is it all a bridge too far, analysts wondered. Based on Gileadâ€™s track record, maybe not. Martin reminded them that â€œwe didnâ€™t have to do this acquisitionâ€ (unlike some pharmas, hint, hint). But rather than sit on their cash pile, Gilead chose to roll the dice in a new game. Thatâ€™s biotech talking.
Update 3/16/09: Astellas announced Monday morning that it would not engage in a bidding war with Gilead and terminated its $16 per share offer.
“Astellas also intends to withdraw a related lawsuit in the Delaware Chancery Court against CV Therapeutics and its directors,” the company stated in a release. “Astellas is a disciplined acquirer and does not see value for Astellas stockholders in CV Therapeutics at the price level ofthe sale announced on March 12.”