Gilead Sciences acquires Immunomedics for $21B

-By Chen Xiangyu (Owen), University College London

deal overview


Acquirer: Gilead Sciences Inc.

Target: Immunomedics Inc.

Total Transaction Value: $21 Billion

Close Date: Q4 2020

Acquirer Advisor: Lazard and Morgan Stanley & Co. LLC

Target Advisor:. Centerview Partners LLC and Bank of America Securities

Gilead Sciences, Inc. completed the purchase of Immunomedics for $21 billion in cash on September 13th, 2020. Gilead Sciences, a biopharmaceutical research company, has earlier developed Hepatitis C medication and HIV treatment therapy with an emphasis on altering treatment for patients with deadly conditions. Gilead will make an offer to buy Immunomedics’ remaining ordinary shares for $88.00 per share, with $15 billion coming from cash available and $6 billion coming from freshly issued debt. The pricing of $88.00 for each share is a 108 percent premium over Immunomedics’ closing price on September 11, 2020.

The deal comes after a few significant pharmaceutical mergers in August, such as Johnson & Johnson’s $6.5 billion acquisition of Momenta Pharmaceuticals. Gilead Sciences may now use its legislative, production, industrial and medicinal skills after acquiring Immunomedics, which is the pioneer in the creation of antibody-drug conjugate technology for tough diseases.

COMPANY DETAILS

Acquiring Company: Gilead Sciences Inc.

Gilead Sciences, Inc. is a biopharmaceutical company centered on the discovery, development, and marketing of new drugs.

Founded in 1987

Headquartered in Foster City, California

Chairman & CEO: Daniel O’Day

Number of Employees: 11,800

Market Cap: $89.01 bn (as of 12/09/2021)

EV: $80.86 bn

LTM Revenue: $22,449 m

LTM EBITDA: $12,939 m

LTM EV/Revenue: 377.3

LTM EV/EBITDA: 65.45

Target Company: Immunomedics Inc.

Immunomedics Inc. is a clinical-stage biopharmaceutical company dedicated to advancing diagnostic imaging and therapeutic devices for cancer and infectious disease treatment. They oversee sales and clinical studies in Europe through companies in the Netherlands and Germany.

Founded in 1982

Headquartered in Morris Plains, New Jersey

Chairman: Dr. Behzad Aghazadeh

Number of Employees: 366

Market Cap: $20.30 bn (as of 12/9/2021)

EV: $19.23 bn

2019 Revenue: $295 k

LTM EBITDA: Loss of $321 m

PROJECTIONS AND ASSUMPTIONS

Long-term upsides

The revenues of Gilead will be increased in the coming years. Trodelvy is expected to reach $750 million in revenue in 2023 based on the latest study. Gilead’s oncology portfolio will be strengthened by this purchase. Trodelvy received FDA approval previously this year and is expected to receive EU approval in 2021. Gilead aims to develop Trodelvy’s ability to address a variety of different cancers, not only standalone but is also in conjunction with other therapies in the coming years.

Short-term upsides

Gilead is able to fight the pressure on prices by addressing the oncology market. Cancer therapies are typically allowed to charge larger pricing premiums than other types of medications because they are regarded to be more revolutionary and inventive. Immunomedics has a high potential antibody and antibody-drug conjugate portfolio (ADC). Trodelvy, an ADC to cure triple-negative breast cancer and bladder cancer, is the medication of focus in this deal. The latest clinical research has produced encouraging results in the treatment of these two types of cancer.


Risks And Uncertainties

Researchers have doubted whether Immunomedics’ Trodelvy will be profitable for Gilead. Despite it having lately been demonstrated to be helpful in the treatment of triple-negative breast cancer and bladder cancer, the $21 billion pricing alone is not sufficient to evaluate the cost. The purchase of Immunomedics by Gilead has tremendous risks on Trodelvy’s performance, with volatility stemming from the medication’s adaptability in curing different types of cancer. The main uncertainties are regarding if the $21 billion pricing and large premium paid for Immunomedics are reasonable.

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