Gilead (GILD) to Buy CBAY for $4.3B, Add PBC Drug to Pipeline

Core Viewpoint - Gilead Sciences, Inc. is acquiring CymaBay Therapeutics, Inc. for $32.50 per share, totaling an equity value of $4.3 billion, which has led to a significant increase in CymaBay's share price [1][2]. Financial Terms of the Acquisition - Gilead's wholly-owned subsidiary will initiate a tender offer for all outstanding shares of CymaBay at the proposed price [2]. - Remaining shares not tendered will be acquired through a second-step merger at the same price [2]. - The acquisition has received approval from both companies' boards and is expected to close in the current quarter, pending regulatory approvals [2]. Strategic Value of the Acquisition - The acquisition will enhance Gilead's pipeline with CymaBay's lead product candidate, seladelpar, which targets metabolic and liver disease pathways [3]. - A new drug application for seladelpar to treat primary biliary cholangitis (PBC) was submitted to the FDA, which granted priority review with a target action date of August 14, 2024 [3]. - Seladelpar has received Breakthrough Therapy Designation and orphan drug status in the U.S. and Europe for PBC treatment [3]. Revenue Impact - Potential approval of seladelpar is expected to boost Gilead's revenue growth, with the transaction likely being neutral to Gilead's bottom line in 2025 and significantly accretive thereafter [4]. Market Context - The acquisition complements Gilead's existing liver disease portfolio, which includes treatments for chronic hepatitis C and delta viruses, and is seen as a strategic move to offset slowing growth in its legacy HIV business [5]. - Despite the acquisition announcement, Gilead's stock rose only 1.06%, indicating investor concerns about the deal's valuation [5]. - Gilead's stock has declined 6.8% over the past six months, contrasting with a 1.3% decline in the industry [5]. Industry Trends - The pharmaceutical and biotech sectors are experiencing increased merger and acquisition activity as companies seek to diversify their portfolios amid generic competition [7]. - Other notable acquisitions in the industry include Bristol Myers' acquisition of Mirati Therapeutics for $4.8 billion and Novartis' acquisition of MorphoSys AG to enhance its oncology portfolio [7].