Gilead Sciences Announces Completion of Acquisition of CymaBay
Gilead Sciences, Inc. completes the acquisition of CymaBay Therapeutics, Inc. for $4.3 billion, enhancing its liver disease treatment portfolio with seladelpar for primary biliary cholangitis. The transaction reduces Gilead's 2024 EPS by approximately $3.10 - $3.20 due to acquisition costs and operating expenses.
Positive
Gilead acquires CymaBay Therapeutics, Inc. for $4.3 billion in total equity value.
The acquisition includes CymaBay's lead product candidate, seladelpar, for treating primary biliary cholangitis.
The transaction aligns with Gilead's commitment to developing innovative therapies for liver diseases.
The merger agreement involved a tender offer of $32.50 per share for all outstanding shares of CymaBay.
Gilead successfully completed the tender offer, acquiring approximately 77.3% of CymaBay's outstanding shares.
CymaBay has now become a wholly owned subsidiary of Gilead, leading to the delisting of its common stock from Nasdaq.
The acquisition is expected to reduce Gilead's GAAP and non-GAAP 2024 EPS by $3.10 - $3.20 due to associated costs.
Seladelpar is still an investigational product with no approved use globally, and its safety and efficacy are yet to be established.
Negative
The acquisition will reduce Gilead's 2024 EPS by approximately $3.35 - $3.45 compared to the previous guidance shared.
Seladelpar's safety and efficacy are not confirmed, posing a risk until further clinical data is available.
The acquisition of CymaBay Therapeutics by Gilead Sciences represents a strategic consolidation in the biopharmaceutical industry, particularly in the liver disease treatment sector. From a financial perspective, the transaction's size, at approximately $4.3 billion, is significant and reflects Gilead's investment in expanding its portfolio in liver diseases. The tender offer price of $32.50 per share needs to be contextualized against CymaBay's pre-acquisition stock performance and the premium Gilead is willing to pay to acquire a company with a promising lead product candidate, seladelpar. Investors should note the immediate impact on Gilead's GAAP and non-GAAP EPS, which is projected to decrease by $3.10 to $3.45 for the fiscal year 2024.
It is important for investors to consider the long-term revenue potential of seladelpar against the short-term earnings dilution. The acquisition's success hinges on the clinical and commercial performance of seladelpar, which, if approved, could offer a new treatment option for primary biliary cholangitis. The market's response to the acquisition will be influenced by the perceived value of seladelpar and Gilead's ability to integrate CymaBay's assets effectively. Additionally, the removal of CymaBay's shares from Nasdaq trading eliminates a potential investment target, consolidating market opportunities within Gilead's stock.
Seladelpar's role as a potential treatment for primary biliary cholangitis (PBC) is a key factor in the acquisition's potential impact on Gilead's business. PBC is a chronic liver disease and the addition of seladelpar could strengthen Gilead's position as a leader in liver therapeutics. The drug's mechanism of action, as well as its efficacy and safety profile, will be under intense scrutiny as it progresses through clinical trials. The market for PBC treatments is competitive and seladelpar's success will depend on its differentiation from existing therapies and its ability to address unmet medical needs, such as pruritus associated with PBC.
It is also important to understand the regulatory hurdles that seladelpar must clear before reaching the market. The drug's approval process will involve rigorous assessment by health authorities and any setbacks could affect Gilead's projected timelines and financial outcomes. The therapeutic's value proposition, in terms of patient outcomes and cost-effectiveness, will be critical in securing payer coverage and achieving market penetration. Stakeholders should monitor the clinical development milestones and regulatory decisions to gauge the acquisition's long-term impact on Gilead's business.
The acquisition of CymaBay by Gilead Sciences can be examined through the lens of healthcare economics, specifically the cost-benefit analysis of developing treatments for challenging liver diseases like PBC. The financial outlay for the acquisition and the subsequent R&D investment in seladelpar must be weighed against the potential market size for PBC treatments and the healthcare cost savings associated with effective management of the disease. The pricing strategy for seladelpar, should it gain approval, will be influenced by factors such as the cost of alternative treatments, the economic burden of PBC and the willingness-to-pay of healthcare systems for an innovative therapy.
Moreover, the acquisition may have implications for competitive dynamics in the liver disease market, potentially influencing drug pricing and access. If seladelpar proves to be a superior treatment option, it could shift the standard of care and exert pricing pressure on competitors. Conversely, the increased concentration in the market could raise antitrust concerns and necessitate regulatory scrutiny. The broader economic impact of the acquisition, including its effect on healthcare expenditure and patient access to novel therapies, will unfold as seladelpar advances through the development pipeline.
03/22/2024 - 09:18 AM
Acquisition Reinforces Gilead’s Leadership in Developing Innovative Therapies For Challenging Liver Diseases
FOSTER CITY, Calif. --(BUSINESS WIRE)--
Gilead Sciences, Inc. (Nasdaq: GILD) today announced the completion of the previously announced transaction to acquire CymaBay Therapeutics, Inc. (Nasdaq: CBAY) for approximately $4.3 billion
“The acquisition of CymaBay brings us a potential best in disease therapy that could transform the treatment landscape for people with primary biliary cholangitis,” said Daniel O’Day, Chairman and Chief Executive Officer, Gilead Sciences. “I want to thank the CymaBay team for their efforts and commitment to addressing this high unmet need. We look forward to advancing seladelpar and building on Gilead’s more than 20-year legacy of treating and curing liver disease on a global scale.”
On February 12, 2024, Gilead and CymaBay announced that CymaBay, Gilead and Pacific Merger Sub, Inc., a wholly owned subsidiary of Gilead (“Purchaser”), had signed a definitive merger agreement pursuant to which a tender offer would be made. Pursuant to the merger agreement, Gilead and Purchaser commenced a tender offer on February 23, 2024, to acquire all outstanding shares of CymaBay at a price of $32.50 77.3% of CymaBay’s outstanding shares (not including 5,095,996 shares delivered through Notices of Guaranteed Delivery, representing approximately 4.2% of the shares outstanding). Pursuant to the terms of the merger agreement, Purchaser merged with and into CymaBay on March 22, 2024. All outstanding shares of common stock of CymaBay, other than (i) shares owned by Gilead, Purchaser or any of Gilead’s direct or indirect wholly owned subsidiaries, (ii) shares owned by CymaBay, (iii) shares irrevocably accepted by Purchaser for purchase pursuant to the tender offer and (iv) shares held by CymaBay stockholders who properly demand appraisal for their shares under Delaware law, were cancelled and converted into the right to receive cash equal to the $32.50
As a result of the completion of the merger, CymaBay has become a wholly owned subsidiary of Gilead and the common stock of CymaBay will no longer be listed for trading on the Nasdaq Global Select Market, which is expected to take effect as of the close of market on March 22, 2024.
This transaction is expected to be accounted for as an asset acquisition and reduce Gilead’s GAAP and non-GAAP 2024 EPS by approximately $3.10 $3.20 $3.35 $3.45
Seladelpar is an investigational product that has not been approved for use anywhere globally, and its safety and efficacy have not been established.
About Gilead Sciences
Gilead Sciences, Inc. is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people. The company is committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis, COVID-19, and cancer. Gilead operates in more than 35 countries worldwide, with headquarters in Foster City, Calif.
Forward-Looking Statements
This communication contains forward-looking statements related to Gilead, CymaBay and the acquisition of CymaBay by Gilead that are subject to risks, uncertainties and other factors. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including all statements regarding the intent, belief or current expectation of Gilead and CymaBay and members of their respective senior management teams. Forward-looking statements include, without limitation, statements regarding the transaction and related matters, prospective performance and opportunities, post-closing operations and the outlook for the companies’ businesses, including, without limitation, the ability of Gilead to advance CymaBay’s product pipeline and successfully commercialize seladelpar; the possibility of unfavorable results from clinical trials; regulatory applications and related timelines; difficulties or unanticipated expenses in connection with integrating the companies; and any assumptions underlying any of the foregoing. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those currently anticipated due to a number of risks and uncertainties. Risks and uncertainties that could cause the actual results to differ from expectations contemplated by forward-looking statements include: the effects of the transaction on relationships with employees, other business partners or governmental entities; the difficulty of predicting the timing or outcome of regulatory approvals or actions, if any; the impact of competitive products and pricing; other business effects, including the effects of industry, economic or political conditions outside of the companies’ control; transaction costs; actual or contingent liabilities; adverse impacts on business, operating results or financial condition in the future due to pandemics, epidemics or outbreaks; and other risks and uncertainties detailed from time to time in the companies’ periodic reports filed with the U.S. Securities and Exchange Commission, including current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K. All forward-looking statements are based on information currently available to Gilead and CymaBay, and Gilead and CymaBay assume no obligation and disclaim any intent to update any such forward-looking statements.
Gilead and the Gilead logo are trademarks of Gilead Sciences, Inc., or its related companies. The CymaBay name and logo are trademarks of CymaBay.
For more information about Gilead, please visit the company’s website at www.gilead.com , follow Gilead on X/Twitter (@Gilead Sciences) and LinkedIn (@Gilead-Sciences).
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Source: Gilead Sciences, Inc.
Gilead acquired CymaBay for approximately $4.3 billion in total equity value.
CymaBay's lead product candidate, seladelpar, for treating primary biliary cholangitis.
Gilead offered $32.50 per share in the tender offer for all outstanding shares of CymaBay.
Gilead acquired approximately 77.3% of CymaBay's outstanding shares through the tender offer.
CymaBay's common stock will no longer be listed for trading on Nasdaq after becoming a wholly owned subsidiary of Gilead.
The acquisition is expected to reduce Gilead's 2024 EPS by approximately $3.10 - $3.20 due to associated costs.
Seladelpar is still an investigational product with no approved use globally, and its safety and efficacy are yet to be established.
