According to a Bloomberg article about this subject, the authors of the story stated that Gilead is not currently interested in selling to or merging with a big pharmaceutical company preferring instead to focus its strategy on partnerships and smaller acquisitions.

We also learned that a spokesman for Gilead declined to comment and that an AstraZeneca spokesman said that the Company does not usually comment on rumors or speculation.

Prohost Observations

We are fans of both firms and each are in our Prohost Portfolio Top-Tier Table #1. If a merger were to take place it could be the highest healthcare deal on record, knowing in fact that AstraZeneca has a Market Cap. around $140 billion and Gilead is currently worth $96 billion, as per the stock’s close on Friday.

We also understand the reasons behind Gilead’s disinterest in the deal. Gilead’s stock price has been under heavy pressure for a couple of years now, for good and/or bad reasons. We believe that in the past six months the firm has made excellent decisions including its collaboration with Galapagos NV (GLPG), an agreement that offered Gilead access to a promising portfolio of compounds that include: six molecules in clinical trials, more than 20 preclinical programs and a proven drug discovery platform. As part of the deal Gilead made a $1.1 billion equity investment into Galapagos NV which will increase its stake in the company from 12.3% to 22% and further increase the stake to 29.9%.

The earliest good news from the collaboration came from Gilead’s and Galapagos’ announcement that their drug filgotinib has met its primary endpoint in week 24 of two Phase III trials, FINCH 1 and FINCH 3, for rheumatoid arthritis patients. Filgotinib inhibited the progression of structural damage in rheumatoid arthritis and caused a greater reduction in the Health Assessment Questionnaire Disability Index than methotrexate monotherapy.

The Good news continued to pour into Gilead as:

• Filgotinib demonstrated durability in the treatment of rheumatoid arthritis and in psoriatic arthritis.
• Remdesivir plus standard of care, versus standard of care alone, demonstrated that infected people in the 5-day remdesivir treatment group were 65 percent more likely to have clinical improvement on day 11 compared with those in the standard of care group.
• Yescarta (axicabtagene ciloleucel) in adult patients with relapsed or refractory indolent non-Hodgkin lymphoma (NHL). After a single infusion of Yescarta, 93 percent of patients responded, with 80 percent of patients achieving a complete response (CR).
• Acquiring Forty-Seven and adding its oncology product magrolimab to Gilead’s immuno-oncology section of the pipeline was a great decision. Based on technology licensed from Stanford University, Magrolimab is a monoclonal antibody against the CD47 receptor, a “don’t eat me” signal that cancer cells commandeer to avoid being ingested by macrophages. This antibody has been evaluated in multiple clinical studies in patients with myelodysplastic syndrome, acute myeloid leukemia, non-Hodgkin lymphoma and solid tumors.

We have great expectations for this oncology product in cancers; no existing product has the capability of a durable response on or to treat cancer cells when resurfaced, metastasized and advanced.

We believe that the time has come for Gilead’s stock price to rebound.

Gilead has many reasons to outperform.

We are sure it will.  

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