Gilead Sciences Inc., maker of the world’s best-selling AIDS medicine, will buy Myogen Inc. for about $2.5 billion to acquire experimental biotechnology drugs for hard-to-treat heart and lung conditions.
Gilead’s $52.50-a-share offer is 50 percent higher than the Sept. 29 closing price for Westminster, Colorado-based Myogen. The acquisition
would give Gilead the U.S. marketing rights for ambrisentan, a compound for potentially fatal high blood pressure in the lungs, and worldwide
rights for darusentan, a drug for high blood pressure that doesn’t respond to existing treatments.
The products may generate more than $1.4 billion in annual revenue for oster City, California-based Gilead, analysts said. Myogen completed esting of ambrisentan for pulmonary arterial hypertension, which affects about 200,000 people worldwide, and plans to file for U.S. regulatory approval this year. The final phase of trials for darusentan started in June.
“We view Myogen’s lead pipeline candidate, ambrisentan, as a potential best-in-class therapy for the treatment of pulmonary arterial
hypertension,” said Geoffrey Meacham, an analyst at J.P. Morgan Securities Inc. in New York, in a note to investors today. “We estimate worldwide sales of $600 million by 2010.” Gilead makes the AIDS drugs Viread and Truvada, a combination of Viread and Emtriva medicines, plus AmBisome for severe fungal infections and Hepsera for hepatitis B. The company also receives royalties from Roche Holding AG’s sales of Tamiflu, the influenza drug Gilead invented. The U.S. and other governments are stockpiling Tamiflu in case of a bird flu outbreak.
T. Rowe Price Shares of Gilead fell $3.92, or 5.7 percent, to $64.85 at 11:13 a.m. New York time in Nasdaq Stock Market composite trading. Today’s decline was the biggest since April. Through Sept. 29, the stock had gained 26 percent this year. Gilead said the acquisition is expected to dilute earnings in 2007 and 2008 and add to them beginning in 2010, according to a company statement.
The Myogen board unanimously recommended Gilead’s offer to shareholders. Shares of Myogen jumped $16.37, or 47 percent, to $51.45. Before today, the stock had gained 17 percent this year. T. Rowe Price Group Inc., the Baltimore-based mutual funds group, was Myogen’s biggest shareholder as of June with 5.8 million shares, or 14 percent, based on data compiled by Bloomberg.
Gilead was advised by Lazard; Myogen by Goldman, Sachs & Co., according to a statement. Second Acquisition The acquisition would be Gilead’s second in the past two months. The biotechnology company bought closely held Corus Pharma last month for $365 million to gain the cystic fibrosis drug Cayston.
“This acquisition can provide an additional leg of growth for Gilead in the next several years,” wrote Michael Aberman, an analyst at Credit
Suisse in New York, in a note to clients today. While both drugs have good potential, the price tag is high, said Aberman, who maintained his “outperform” rating on Gilead.
Myogen’s ambrisentan has been granted orphan drug status in the U.S. and Europe, a measure designed to encourage development of treatments for rare conditions by giving them expanded marketing protection from competing drugs. GlaxoSmithKline Plc holds the rights to sell the drug outside the U.S.
Myogen’s darusentan is also a potential best-in-class medication for resistant hypertension, Meacham wrote. While pulmonary hypertension and resistant hypertension “are strategically not core to Gilead, we view both markets as easy to address with limited investments in sales and marketing,” Meacham said. “Ultimately, we see ambrisentan and darusentan as $600 million and $800
million to $1 billion opportunities at peak.”
The transaction is expected to close before the end of 2006, Gilead said. The company will make a cash tender offer for all outstanding Myogen common shares at $52.50 each, followed by a cash merger in which Gilead will acquire any remaining outstanding shares at the same price. Myogen will be a wholly owned subsidiary of Gilead.
