Gilead to Buy Forty Seven for $4.9 Billion for Cancer Drug

(Bloomberg) -- Gilead Sciences Inc. agreed to buy Forty Seven Inc. for about $4.9 billion to advance into one of the hottest areas of pharmaceutical research: cancer treatments that harness the immune system to fight tumors.

Gilead will acquire Forty Seven for $95.50 per share in cash in a transaction cleared by both boards, the Foster City, California-based company said in a statement Monday. The price is a 96% premium to Forty Seven’s closing price Thursday, before Bloomberg News broke the news of Gilead’s approach. Forty Seven’s shares rose 62% to $93.79 at 10:02 a.m. in New York.

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 deal with Forty Seven complements its 2017 acquisition of Kite Pharma, bringing an experimental therapy that has potential to be the first in its class, said Chief Executive Officer Daniel O’Day.

“It fits perfectly into our strategy of finding areas of big unmet medical need,” O’Day said.

O’Day took the reins last March, saying one of his top priorities was to bolster Gilead’s drug pipeline.

Menlo Park, California-based Forty Seven received interest from other potential suitors, Bloomberg reported last week, citing people familiar with the company. The agreed price for the Gilead takeover includes options and warrants.

The company’s experimental medicine, called magrolimab, is a monoclonal antibody in early studies for several cancers affecting the blood and lymph nodes, including acute myeloid leukemia and diffuse large B-cell lymphoma.

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. But O’Day said he expects Forty Seven’s therapy will face less difficulty in the market.

“Forty Seven is pursuing a more well-trodden path,” he said.

The therapy targets a “do-not-eat-me” signal that allows cancer cells to avoid destruction. The drug blocks the signal, allowing the patient’s own immune system to engulf and eradicate the malignant cells.

Forty Seven also has two experimental medicines that may soon enter clinical tests, including an antibody that could be combined with magrolimab.

O’Day said that Gilead is actively hunting for more deals in both the immunology and virology spaces.

Citigroup Inc. and JPMorgan Chase & Co. acted as joint financial advisers to Gilead. Centerview Partners LLC is acting as the Forty Seven’s financial adviser. Skadden, Arps, Slate, Meagher & Flom LLP served as Gilead’s legal counsel and Cooley LLP did the same for Forty Seven.

--With assistance from Ed Hammond and Nabila Ahmed.

To contact the reporters on this story: Marthe Fourcade in Paris at mfourcade@bloomberg.net;Kristen V. Brown in San Francisco at kbrown340@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Timothy Annett, Mark Schoifet

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