In the seventh biggest biotech M&A ever, Gilead Science Inc. will acquire Immunomedics Inc. for $21 billion in a move that substantially transforms Gilead’s oncology portfolio. It is also Gilead’s largest acquisition.

The massive deal that has analysts and investors cocking their heads at the cost brings Trodelvy (sacituzumab govitecan-hziy), a trophoblast antigen2 (TROP2) directed antibody-drug conjugate (ADC) that received the FDA’s accelerated approval in April for treating triple-negative breast cancer in patients who have undergone at least two prior therapies. It is the first ADC approved specifically in the indication and the first anti-Trop-2 ADC to reach patients.

Trodelvy’s approval marked the eighth ADC to reach the market over the last two decades. Fully half of that number has arrived inside the last two years, as ADC developers have ironed out at least some of the stability and toxicity problems hindering the modality’s emergence.

The acquisition price is an issue for analysts and investors. SVB Leerink analyst Geffrey C. Porges wrote Sept. 14 that investor push back will likely be about the deal’s price, not the product or the immediate commercial opportunity.

“Gilead reassured us that the sale was highly competitive, and started with collaboration discussions and turned, over the course of several months, to outright acquisition terms,” Porges wrote. “They assured us that ‘at least four’ other global biopharmaceutical companies were actively negotiating for the asset or the company, and this competition is perhaps reflected in the price.”

Gilead stock (NASDAQ:GILD) languished in premarket trading, down 2%, but Morris Plains, N.J.-based Immunomedics shares (NASDAQ:IMMU), at 106%, more than doubled before the market opened.

When approved, Morris Plains, N.J.-based Immunomedics set the wholesale acquisition cost for a single-use 180-mg vial of Trodelvy at $2,012, which equates to $16,096 per 21-day cycle for a 70-kg person. Based on a median five-month treatment duration, as the company maintained in its phase II study known as IMMU-132-01, the price amounts to about $113,000 per course of therapy – about 20% lower than Padcev (enfortumab vedotin-ejfv), the Nectin-4 targeted ADC from Tokyo-based Astellas Pharma Inc. and Seattle Genetics Inc., of Bothell, Wash., approved in late 2019 for metastatic urothelial cancer.

Gilead has spent a lot of time and money in the past two years to strengthen its oncology portfolio, completing 12 deals that include the acquisition of Forty Seven Inc. in March for $4.9 billion. That deal brought Gilead Magrolimab, a monoclonal antibody in clinical development for treating several cancers, including myelodysplastic syndrome, acute myeloid leukemia and diffuse large B-cell lymphoma.

Daniel P. O'Day, Gilead’s chairman and CEO, reassured investors in a Sept. 13 conference call that the deal is the right move, despite the enormous price tag.

“From a financial perspective, following the closing of the transaction, Trodelvy will immediately contribute revenue and will significantly enhance our growth prospects in the near term and longer term,” O’Day said. “We expect the acquisition to create significant value for our shareholders. The transaction reflects the potential value as well as the synergies it brings to our existing platform and our future pipeline.”

The deal is expected to close during the fourth quarter of 2020.