Gilead Seeks Diversification Into Immuno-oncology Space With $11.9 Billion Kite Pharma Acquisition

In a major push into the immuno-oncology space, Gilead Sciences, Inc. GILD, which is primarily into antiviral drug development, specifically for the treatment of HIV, hepatitis B, hepatitis C and influenza, announced a multi-billion dollar deal to buy Kite Pharma Inc KITE.

The deal provides for Gilead buying Kite at $180 per share in cash, valuing the latter at $11.9 billion.

The transaction value represents a 29.4 percent premium over Kite Pharma's closing price of $139.10 last Friday.

In reaction to the deal news, which was originally reported by the Wall Street Journal and has since then been confirmed by the companies, shares of Kite Pharma were soaring 28.68 percent to $179.

Gilead shares were seen up 1.30 percent at $73.79 in pre-market trading.

The purchase would be made through a tender offering by a subsidiary of Gilead. Following the completion of the tender offer, Gilead would purchase the remaining shares not tendered through a second-step merger at the same price at which the tender offer was made.

The companies expect the deal to close in the fourth quarter of 2017. The boards of both companies have approved the deal.

See also: August PDUFA Dates: Biotech Investors Stay Tuned To A Month Of Plenty

Kite Pharma specializes in cell therapy, which uses a patient's own immune system to fight cancer. The company's advanced therapy candidate axicabtagene ciloleucel meant to treat aggressive non-Hodgkin lymphoma is a CAR T therapy and has acquired priority review status from the FDA.

The PDUFA action date for the therapy is set for Nov. 29, 2017.

With a Marketing Authorization Approval submitted with the European Medicines Agency, the company expects approval in Europe in 2018.

Gilead expects the deal to turn neutral to earnings by the third year after the closing of the deal and be accretive thereafter.

"The acquisition of Kite establishes Gilead as a leader in cellular therapy and provides a foundation from which to drive continued innovation for people with advanced cancers," said John F. Milligan, PhD, Gilead's president and CEO.

"The field of cell therapy has advanced very quickly, to the point where the science and technology have opened a clear path toward a potential cure for patients."