Here’s the in­side ac­count of Gilead­'s 11-week sprint to its $12B Kite buy­out

What start­ed as a ca­su­al dal­liance be­tween ex­ec­u­tives at Gilead and Kite in 2015 marked by some oc­ca­sion­al flir­ta­tion over head-turn­ing tech­nol­o­gy turned se­ri­ous ear­ly this year, prob­a­bly at JP Mor­gan, as two top deal­mak­ers — Gilead’s An­drew Dick­in­son and Kite’s He­len Kim — de­cid­ed to see if they should get se­ri­ous about a union of the two biotechs.

By mid-June the two CEOs, John Mil­li­gan and Arie Bellde­grun, got in­to the act. And over the next 11 weeks the over­ture turned pas­sion­ate enough for Mil­li­gan and Gilead to up their ini­tial of­fer by about $5 bil­lion.

Arie Bellde­grun and John Mil­li­gan

There was an ini­tial bid, which was stiffly re­buffed. The come­back with a sweet­ened of­fer was al­so re­ject­ed, but as the num­bers grew larg­er — so did the in­ter­est in a buy­out as Gilead turned from a spec­ta­tor in the fi­nal leg of one of the most close­ly-watched de­vel­op­ment races in biotech to a jock­ey in the fi­nal stretch.

It’s all spelled out in a new SEC fil­ing that says a lot about how these big deals get done, and the val­u­a­tions that game-chang­ing tech­nolo­gies like CAR-T are fetch­ing.

In a sim­pli­fied blow-by-blow, here are the high­lights:

  • Bellde­grun and Mil­li­gan, chap­er­oned by Gilead COO Kevin Young, had their first sit down about a deal on June 12.
  • At the end of June there was a cru­cial gath­er­ing of Mil­li­gan with the team at Kite to dis­cuss com­mer­cial and man­u­fac­tur­ing plans. Kite had been fine tun­ing this pre­sen­ta­tion for more than a year, and based on Mil­li­gan’s warm com­ments lat­er about the San­ta Mon­i­ca crew at Kite, he clear­ly hit it off with some of the key play­ers.
  • The next key event was No­var­tis’ ODAC com­mit­tee meet­ing at the FDA on Ju­ly 12 for CTL019, which led to a near unan­i­mous vote for an ap­proval. Gilead ex­ecs watched every minute of it. It was a chance to size up an im­por­tant po­ten­tial ri­val. “Al­though Kite’s CAR-T ther­a­py, axi-cel, was sub­mit­ted for ap­proval for a dif­fer­ent in­di­ca­tion, the out­come of the ODAC meet­ing was im­por­tant to fur­ther in­form Par­ent’s (Gilead’s) eval­u­a­tion of Kite and CAR-T ther­a­pies.”
  • The very next day Kite R&D chief David Chang ar­rived at Gilead HQ to dis­cuss his work.
  • It must have gone well. Three days lat­er came the first of­fer: $127 per share in cash, a strong 51% pre­mi­um over the 60-day weight­ed av­er­age.
  • Ju­ly 19, the Kite board slammed the door on that. They not on­ly said no to that price, they added the com­pa­ny was not for sale.
  • Ju­ly 28. How about $160? Bellde­grun said he was still dis­ap­point­ed, but he was al­so clear­ly not of­fend­ed. How about an­oth­er get-to­geth­er in LA? Now, the com­pa­ny was clear­ly for sale.
  • On Au­gust 1 the top ex­ecs at both com­pa­nies gath­ered to dis­cuss not just the lead drug, mar­ket­ing and man­u­fac­tur­ing, but all the next-gen re­search work that Kite has un­der­way.  Bellde­grun to Mil­li­gan: That was a dis­ap­point­ing of­fer, if this is go­ing to hap­pen, you have to make it ‘com­pelling.’ Mil­li­gan to Bellde­grun: That’s go­ing to be a tough sale to the board.
  • On Au­gust 8, af­ter meet­ings and fol­lowup dis­cus­sions, Kite an­nounced with some fan­fare that they had filed their IND and that the FDA would not re­quire a com­mit­tee re­view. The news made a splash, and it didn’t es­cape the at­ten­tion of Mil­li­gan or any­one at Gilead in the know.
  • Au­gust 18. Mil­li­gan and Gilead ex­ec­u­tive chair­man John Mar­tin met with Bellde­grun in New York and in­for­mal­ly of­fered $176 a share. Bellde­grun coun­tered quick­ly, ask­ing for $180, an 82% pre­mi­um.

Due dili­gence fol­lowed. Sul­li­van & Cromwell weighed in. Kite ex­ecs had a chance to talk about re­tain­ing Kite staff. And on Au­gust 28, the deal was done at $180 a share, or close to $12 bil­lion in to­tal.

Bellde­grun’s share of that is about $600 mil­lion based on­ly on his own stock.

There was nev­er a men­tion of any oth­er bid­der or at­tempt to start a bid­ding war, as David Hung had done with great ef­fect when he was di­rect­ing the ne­go­ti­a­tions with Pfiz­er over the $14 bil­lion Medi­va­tion deal.

Biotech and Big Phar­ma: A blue­print for a suc­cess­ful part­ner­ship

Strategic partnerships have long been an important contributor to how drugs are discovered and developed. For decades, big pharma companies have been forming alliances with biotech innovators to increase R&D productivity, expand geographical reach and better manage late-stage commercialization costs.

Noël Brown, Managing Director and Head of Biotechnology Investment Banking, and Greg Wiederrecht, Ph.D., Managing Director in the Global Healthcare Investment Banking Group at RBC Capital Markets, are no strangers to the importance of these tie-ups. Noël has over 20 years of investment banking experience in the industry. Before moving to the banking world in 2015, Greg was the Vice President and Head of External Scientific Affairs (ESA) at Merck, where he was responsible for the scientific assessment of strategic partnership opportunities worldwide.

Peter Nell, Mammoth Biosciences CBO

UP­DAT­ED: Jen­nifer Doud­na spin­out inks a Mam­moth CRISPR deal with Ver­tex worth near­ly $700M

When a company gets its start in gene editing pioneer Jennifer Doudna’s lab, it’s bound to make headlines. But three years in, the fanfare still hasn’t died down for Mammoth Biosciences. Now, the Brisbane, CA-based company is cheering on its first major R&D pact.

Mammoth unveiled a nearly $700 million deal with Vertex on Tuesday morning, good for the development of in vivo gene therapies for two mystery diseases. The stars of the show are Mammoth’s ultra-small CRISPR systems, including two Cas enzymes licensed from Doudna’s lab over the past couple years, Cas14 and Casɸ.

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Credit: Shutterstock

How Chi­na turned the ta­bles on bio­phar­ma's glob­al deal­mak­ing

Fenlai Tan still gets chills thinking about the darkest day of his life.

Three out of eight lung cancer patients who received a tyrosine kinase inhibitor developed by his company, Betta Pharma, died in the span of a month. Tan, the chief medical officer, was summoned to Peking Union Medical College Hospital, where the head of the clinical trial department told him that the trial investigators would be conducting an autopsy to see if the patients had died of the disease — they were all very sick by the time they enrolled — or of interstitial lung disease, a deadly side effect tied to the TKI class that’s been reported in Japan.

No­var­tis' sec­ond at­tempt to repli­cate a stun­ning can­cer re­sult falls flat

Novartis’ hopes of turning one of the most surprising trial data points of the last decade into a lung cancer drug has taken another setback.

The Swiss pharma announced Monday that its IL-1 inhibitor canakinumab did not significantly extend the lives or slow the disease progression of patients with previously untreated locally advanced or metastatic non-small cell lung cancer when compared to standard of-care alone.

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Vas Narasimhan, Novartis CEO (Simon Dawson/Bloomberg via Getty Images)

With San­doz con­tin­u­ing to drag on No­var­tis, Vas Narasimhan says he may fi­nal­ly be ready for a sale or spin­off

After years of rehab work aimed at getting Sandoz in fighting trim to compete in a market overshadowed by declining prices, CEO Vas Narasimhan took a big step toward possibly selling or spinning off the giant generic drug player.

The pharma giant flagged plans to launch a strategic review of the business in its Q3 update, noting that “options range from retaining the business to separation.”

Analysts have been poking and prodding Novartis execs for years now as Narasimhan attempted to remodel a business that has been a drag on its performance during most of his reign in the CEO suite. The former R&D chief has made it well known that he’s devoted to the innovative meds side of the business, where they see the greatest potential for growth.

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Peter Greenleaf, Aurinia CEO

Af­ter pass­ing on Ac­celeron, Bris­tol My­ers eyes bolt-on ac­qui­si­tion of au­toim­mune spe­cial­ist — re­port

Bristol Myers Squibb is looking to beef up its autoimmune portfolio by scooping up Aurinia Pharmaceuticals, Bloomberg reported.

The recent overtures to Aurinia, relayed by anonymous insiders, came just as Bristol Myers turned down buyout talks with partners at Acceleron — which Merck ultimately struck a deal to acquire for $11.5 billion. Bristol Myers has reportedly decided to cash out on its minority stake, likely bagging $1.3 billion in the process, while keeping the royalty deals on two of Acceleron’s blood disorder drugs.

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An­gion's or­gan dam­age drug strikes out again, this time in high-risk kid­ney trans­plant pa­tients

After flopping a test in Covid-19 earlier this year, Angion’s lead organ damage drug has now hit the skids again in kidney transplant patients.

Angion and partner Vifor Pharma’s ANG-3777 failed to beat out placebo in terms of improving eGFR, a measure of kidney function, in patients who had received a deceased donor kidney transplant and were at high risk of developing what is known as delayed graft function, according to Phase III results released Tuesday.

(Photo courtesy Pfizer)

FDA's vac­cine ad­comm votes al­most unan­i­mous­ly in fa­vor of Pfiz­er's Covid-19 vac­cine for younger chil­dren

The FDA’s Vaccines and Related Biological Products Advisory Committee on Tuesday voted 17-0, with one panelist abstaining, that the benefits of the Pfizer-BioNTech Covid-19 vaccine outweigh the risks for children between the ages of five and 12.

The vote will likely trigger a process that could allow the shots to begin rolling out as early as next week.

The vaccine, which is one-third of the adult Pfizer dose, proved to be about 90% effective in a placebo-controlled trial in which about 1,500 kids in this age range received the vaccine, and only about 12% of those receiving the vaccine had any adverse event. All serious adverse events in the trial were unrelated to the vaccine.

Stéphane Bancel, Moderna CEO (Steven Ferdman/Getty Images)

Mod­er­na chips in fur­ther on African vac­cine sup­ply — but ad­vo­cates are call­ing for even more

In a sign of its growing commitment to the continent, Moderna will supply up to 110 million doses of its Covid-19 vaccine to the African Union, the company announced Tuesday. And CEO Stéphane Bancel said it’s just the first step.

“We believe our vaccine can play an important role in addressing the needs of low-income countries given its combination of high Phase 3 efficacy against COVID-19, strong durability in the real-world evidence, and superior storage and handling conditions. We recognize that access to COVID-19 vaccines continues to be a challenge in many parts of the world and we remain committed to helping to protect as many people as possible around the globe,” Bancel said in a statement.