Gilead Is Said to Hold Arcus Stake Talks, Spurring 54% Rally

(Bloomberg) -- Gilead Sciences Inc. is considering acquiring a stake in Arcus Biosciences Inc., a cancer therapeutics company backed by Alphabet Inc., people familiar with the matter said.

The companies have held discussions about Gilead taking a significant stake in the Hayward, California-based company, and also about possible development partnerships, said the people, who asked not to be identified as the details are private.

Arcus shares jumped as much as 54% after the close of regular trading Wednesday. Earlier in the day, the shares fell 7.2% to $15.58 in New York during the regular trading session, giving the company a market value of $716.3 million.

No deal is certain and the talks could still fall apart, the people said.

Gilead has been expanding through acquisitions into one of the hottest areas of pharmaceutical research: cancer treatments that harness the immune system to fight tumors. It acquired Forty Seven, an experimental cancer treatment company, in a $4.9 billion deal last month, paying a 96% premium over the target’s previous closing price.

Alphabet is the largest shareholder in Arcus Biosciences, owning about 11%, data compiled by Bloomberg show. Alphabet, which also invested in Forty Seven through one of its arms, first acquired the stake in Arcus as part of a venture funding round in 2017.

Representatives for Arcus and Gilead declined to comment. A spokesman for Alphabet didn’t immediately return a request for comment.

Gilead’s hepatitis C franchise turned the company into a drug-industry giant, but sales of the treatments have slipped from their peak and the company has struggled to find new streams of revenue. The company is still a dominant maker of HIV drugs.

Its $11 billion acquisition of Kite Pharma in 2017 has so far yet to pay off. Kite’s experimental therapy, Yescarta, has struggled as both government and private health plans have balked at the high price of the one-time treatment.

Gilead is one of the drug companies looking to treat Covid-19. Its experimental drug for patients with moderate to severe Covid-19 infections -- remdesivir -- has shown promise in an early analysis, raising tentative hope that the first treatment for the novel virus may be on the horizon.

Arcus went public in 2018. The company’s therapies target small molecules and are aimed at helping shrink tumors.

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