Gilead Sciences Inc. will acquire Forty Seven Inc. for $4.9 billion, or $95.50 per share in cash, bringing Gilead magrolimab, an anti-CD47 monoclonal antibody being developed to treat several cancers, including myelodysplastic syndrome (MDS), acute myeloid leukemia (AML) and diffuse large B-cell lymphoma (DLBCL). The deal is a follow-up to Gilead’s statement of intent regarding acquisitions to build on its presence in immuno-oncology.
“This mechanism is not covered in our current portfolio,” Merdad Parsey, Gilead’s chief medical officer, said on Monday morning’s investor call. “We will continue to pursue deals like this.”
SVB Leerink analyst Geoffrey Porges said the deal represents “a reasonable late-stage oncology asset for Gilead to acquire, but [we] do not see it as a foundational oncology platform for Gilead.”
While the deal is a large one, it does not rank in the top 20 for either biopharma or biotech M&As. It is expected to close in the second quarter of 2020. This deal is Gilead’s third biggest acquisition, behind Pharmasset Inc., acquired in 2012 for $11.4 billion and Kite Pharma Inc, acquired in August 2017 for $11.9 billion, according to Cortellis.
This is also Gilead’s second deal under CEO Daniel O’Day, the first being the July 2019 global research and development collaboration with Mechelen, Belgium’s Galapagos NV that saw Gilead paying $3.95 billion up front and make a $1.1 billion equity investment. As part of the collaboration, Gilead gained rights to GLPG-1690, Galapagos’ phase III candidate for idiopathic pulmonary fibrosis. Gilead also received option rights for GLPG-1972, a phase IIb candidate for osteoarthritis, in the U.S.
Mizuho Securities analyst Salim Syed wrote that those deals show a pattern that Gilead “is willing to allocate capital to medium-sized deals (rather than large-scale transactions which management noted today have a high bar), and do it at a quicker pace than GILD has historically done M&A, both positives in our view.”
The deal boosted Forty Seven’s stock (NASDAQ:FTSV) as it rose a dramatic 61.9%, closing March 2 at $93.91 per share. Menlo Park, Calif.-based Forty Seven, which moved the needle big time last year, with its shares vaulting a whopping 150%, carried the momentum into 2020, with the share value up 14%. The immuno-oncology-focused company said its expected milestones for this year include advancing magrolimab in registration-enabling programs for the treatment of patients with untreated, higher-risk MDS and heavily pretreated, relapsed or refractory DLBCL. In MDS, it planned to initiate a phase III ENHANCE trial evaluating the combination of magrolimab and azacitidine compared to azacitidine alone in patients with untreated, higher-risk disease in the second quarter.
Meanwhile, Gilead’s (NASDAQ:GILD) stock rose a more modest 8.7%, closing at 75.40 per share.
Forty Seven presented promising phase Ib data on magrolimab for treating MDS and AML at December’s American Society of Hematology (ASH) meeting. The updated data from its phase Ib trial evaluating magrolimab, which is designed to interfere with recognition of CD47 by the SIRPα receptor on macrophages, thus blocking the "don't eat me" signal used by cancer cells to avoid being ingested by macrophages, showed the combination with azacitidine is active and well-tolerated in patients with MDS and AML. Data also showed that in higher-risk MDS, the overall response rate was 92%, as 12 patients achieved a complete response rate, with 33% achieving a marrow CR and 8% achieving hematologic improvement.
H.C. Wainwright & Co. analyst Swayampakula Ramakanth wrote March 2 that if “patients are able to maintain the high level of response seen at ASH, we believe it could support the company’s plans for an accelerated approval in MDS in the U.S.”
Magrolimab was granted fast track designation by the FDA for treating MDS and AML, and for the treatment of relapsed or refractory DLBCL and follicular lymphoma, two forms of B-cell non-Hodgkin lymphoma. Magrolimab has also been granted orphan drug designation by the FDA to treat MDS and AML and by the EMA to treat AML.
Two companies incorporating CD47 antibodies in their developmental therapies, Shanghai’s I-Mab Biopharma Co. Ltd. and Trillium Therapeutics Inc., had a strong day Monday. Shares of I-Mab (NASDAQ:IMAB), which is focused on immuno-oncology and autoimmune diseases, closed at $13.51, up 9.84%. I-Mab has an internally developed CD47 program in the middle of phase I development in the U.S. and has IND approval in China to begin a clinical study. I-Mab was also the first IPO out of the gate this year, pricing its IPO for gross proceeds of $103.7 million.
Cambridge, Mass.-based Trillium (NASDAQ:TRIL) was up 26.34%, to close March at $6.38. The company closed its public offering for gross proceeds of about $117 million in February.