Gilead to acquire cancer therapy developer Arcellx for up to $7.8 billion

By Christy Santhosh

Feb 23 (Reuters) - Gilead Sciences will pay as much as $7.8 billion to acquire partner Arcellx in its largest deal since 2020, the biopharma company said on Monday, as it looks to strengthen its lineup of cancer treatments.

The company GILD.O, with a strong foothold in HIV drugs and liver disease treatments, has been looking for growth beyond its core areas as it faces declining sales of its COVID-19 drug Veklury and prepares for future patent losses.

It will pay $115 per share in cash, which is at a premium of 79% to the stock's last close.

Shares of Arcellx ACLX.O were trading up 78.5% at $114.46, while Gilead fell about 1% before the bell.

Kite Pharma, a unit of Gilead Sciences, was partnering with Arcellx to jointly develop and sell anito-cel - an experimental CAR-T therapy for multiple myeloma, a type of blood cancer.

J.P.Morgan analyst Christopher Schott sees anito-cel as a "multi-billion dollar product for Gilead over time" that is "well positioned to take share in the myeloma market".

The U.S. Food and Drug Administration is currently reviewing the therapy as a fourth-line treatment for patients with relapsed or refractory multiple myeloma, with a decision expected by December 23 this year.

RBC Capital Markets analyst Brian Abrahams said anito-cel has shown generally comparable efficacy and the potential for a better safety profile when compared to Johnson & Johnson JNJ.N and partner Legend Biotech's LEGN.O therapy Carvykti.

This is Gilead's biggest deal since its $21 billion buyout of Immunomedics , giving it access to Trodelvy, an antibody-drug conjugate used to treat a type of advanced breast cancer.

Gilead CEO Daniel O'Day said anito-cel's unique targeting technology could help Gilead develop next-generation cell therapies, strengthening its potential in oncology and inflammation treatment.

Upon FDA approval of anito-cel, the proposed transaction is expected to be accretive to earnings per share in 2028 and beyond.

Gilead will also pay Arcellx shareholders $5 per share, contingent upon the achievement of cumulative anito-cel global net sales of at least $6 billion from launch through the end of 2029.