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Gilead Boosts Cancer Pipeline with $510M YM BioSciences Buy

By Marie Powers
Staff Writer

One day after disclosing a 2-for-1 stock split, Gilead Sciences Inc. surprised the biotech world with a deal to acquire Canadian firm YM BioSciences Inc., paying US$2.95 per share in cash in a transaction Gilead valued at US$510 million.

YM’s lead drug candidate, CYT387, is an oral Janus kinase (JAK)/JAK2 kinase inhibitor formulated for once-daily dosing. The JAK enzymes have been implicated in a number of disorders, including myeloproliferative diseases, inflammatory disorders and certain cancers.

At the 2011 meeting of the American Society of Hematology, YM reported positive results from a Phase I/II trial of CYT387 in 166 patients with myelofibrosis, a life-threatening myeloproliferative disease. The trial produced transfusion independence in more than half of the participants for at least 12 weeks with significant improvements in splenomegaly and constitutional symptoms.

The outcome of the trial not only produced improvement in spleen enlargement and constitutional symptoms of the disease but also had a significant effect on anemia – an effect that was rather unexpected before the drug was tested in humans. (See BioWorld Today, Dec. 14, 2011.)

Although YM was initially targeting development of CYT387 for myelofibrosis, the compound has potential for other blood disorders, such as myelodysplastic syndrome and leukemia, and evidence suggests it could be effective in solid tumors.

On the strength of the Phase I/II data, the Mississauga, Ontario-based biotech planned to begin pivotal trials in mid-2012 and subsequently raised $70 million earlier this year. (See BioWorld Today, Feb. 27, 2012.)

Pending completion of the acquisition, Gilead will assume that responsibility, with plans to initiate a pivotal Phase III trial of CYT387 in myelofibrosis in the second half of 2013. Although the Foster City, Calif.-based company is better known for its products and pipeline in HIV/AIDS and liver disease, Gilead is conducting Phase II trials of simtuzumab (formerly GS-6624), a monoclonal antibody targeting the human lysyl oxidase-like 2 protein, in myelofibrosis, colorectal cancer, pancreatic cancer and certain fibrotic diseases.

The deal calls for YM shareholders to receive US$2.95 per common share in cash and holders of warrants and stock options to receive a cash payment equal to the difference between US$2.95 and the exercise price of such warrant or stock option. YM is expected to call a special shareholder meeting on or before Feb. 11, 2013, to secure shareholder approval. Closing of the transaction also is subject to other customary conditions, including expiration or termination of the waiting period under the Hart Scott Rodino Antitrust Improvements Act and the review period under Canada’s Competition Act. Approval by Gilead shareholders is not required.

The deal received unanimous approval from YM’s board of directors and is expected to close in the first quarter of 2013. As of Sept. 30, YM reported C$125.5 million (US$127.4 million) in cash and equivalents. Gilead, which plans to fund the acquisition with cash on hand, reported $2.65 billion in cash and equivalents as of Sept. 30.

When the deal was disclosed before the market’s opening bell, YM’s shares (NYSE:YMI) soared more than 75 percent, up $1.26, after closing Tuesday at $1.63.