Pin­ing for a megadeal, an an­a­lyst kicks the tires for an­oth­er Gilead M&A test dri­ve

John Mil­li­gan

Gilead CEO John Mil­li­gan drew plen­ty of nods re­cent­ly when he said you have to ig­nore what’s go­ing on in Wash­ing­ton DC and just run your busi­ness. But he was ig­nor­ing top an­a­lysts long be­fore he got a chance to tune out the Trump ad­min­is­tra­tion.

Some promi­nent stock watch­ers have been in­sist­ing for some time now that Mil­li­gan and Gilead $GILD have to use a moun­tain of cash on hand to grab a big pipeline/port­fo­lio that can reen­er­gize the falling num­bers in their rev­enue fore­casts. With the hep C peak be­hind it, the stock needs new moun­tains to climb to in­spire in­vestors. But the CEO sits on Gilead’s cash and qui­et­ly bides his time – just like al­most every oth­er big play­er that’s sup­posed to be in the buy­ers’ cir­cle this year.

Ge­of­frey Porges, Leerink

Not too both­ered by that, Leerink’s Ge­of­frey Porges has not on­ly spelled out the rea­sons why he’d cheer a Ver­tex $VRTX buy­out, twice, he’s now ex­pand­ing Mil­li­gan’s menu with an­oth­er biotech that is on every­one’s M&A watch list: In­cyte $IN­CY.

Porges still likes Ver­tex best. It has a proven pres­ence in the cys­tic fi­bro­sis mar­ket with a good pipeline. The num­bers can work. An In­cyte deal would de­pend on see­ing its IDO1 star epaca­do­stat come through with an ap­proval and a mar­ket hit to war­rant the cash need­ed to buy a com­pa­ny with a mar­ket cap of $27 bil­lion. But Porges be­lieves that if they get in there and re­al­ly carve up the ex­pense side of the busi­ness at the Delaware biotech — read: big lay­offs — an ac­qui­si­tion can play out quite nice­ly. There’s up­side in the hot im­muno-on­col­o­gy field and In­cyte has a flag­ship drug as well. Notes Porges:

In­cyte’s flag­ship prod­uct, Jakafi (rux­oli­tinib), is ap­proved in mul­ti­ple hema­to­log­i­cal in­di­ca­tions and ge­o­gra­phies and fits the pro­file of Gilead’s port­fo­lio and or­ga­ni­za­tion, par­tic­u­lar­ly since the demise of their own JAK in­hibitor, mo­melo­tinib. In­cyte has a promis­ing im­munother­a­py drug in late-stage de­vel­op­ment with epaca­do­stat, as well as a port­fo­lio of emerg­ing on­col­o­gy prod­ucts of un­cer­tain val­ue. Our pre­lim­i­nary analy­sis and il­lus­tra­tive merg­er mod­el in­di­cates that Gilead could af­ford to pay ~30-40% pre­mi­um ($173-187/share) for In­cyte and still gen­er­ate a ro­bust ~19% ac­cre­tion by year 5. Sim­i­lar­ly, our analy­sis in­di­cates that the trans­ac­tion could gen­er­ate a sig­nif­i­cant 11% in­ter­nal rate of re­turn (IRR) for Gilead share­hold­ers over the next ten years. This rate of re­turn is slight­ly high­er to the ex­pect­ed re­turn from our ear­li­er analy­sis of an ac­qui­si­tion of Ver­tex, and would amount to a suc­cess­ful de­ploy­ment of cap­i­tal, at least up to a price of $220/share.

The year got start­ed with a tremen­dous burst of en­thu­si­asm for the buy­outs to come this year. But M&A has large­ly been a bust, with big dis­trac­tions on tax re­form as well as an un­re­solved case of stick­er shock for every­thing on the mar­ket with a nice set of as­sets to in­spect. In the mean­time, a lit­tle on­line win­dow shop­ping will have to sub­sti­tute for the re­al thing.


As Nas­daq en­rolls the fi­nal batch of 2019 IPOs, how have the num­bers com­pared to past years?

IGM Biosciences’ upsized IPO haul, coming after SpringWorks’ sizable public debut, has revved up some momentum for the last rush of biotech IPOs in 2019.

With 39 new listings on the books and roughly two more months to go before winding down, Nasdaq’s head of healthcare listings Jordan Saxe sees the exchange marking 50 to 60 biopharma IPOs for the year.

“December 15 is usually the last possible day that companies will price,” he said, as companies get ready for business talks at the annual JP Morgan Healthcare Conference in January.

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A fa­vorite in Alex­ion’s C-suite is leav­ing, and some mighty sur­prised an­a­lysts aren’t the least bit hap­py about it

Analysts hate to lose a biotech CFO they’ve come to trust and admire — especially if they’re being blindsided by a surprise exit.

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David Grainger [file photo]

'Dis­con­nect the bas­tard­s' — one biotech's plan to break can­cer cell­s' uni­fied de­fens­es

Chemotherapy and radiotherapy are the current gladiators of cancer treatment, but they come with well-known limitations and side-effects. The emergence of immunotherapy — a ferocious new titan in oncologist’s toolbox — takes the brakes off the immune system to kill cancer cells with remarkable success in some cases, but the approach is not always effective. What makes certain forms of cancer so resilient? Scientists may have finally pieced together a tantalizing piece of the puzzle, and a new biotech is banking on a new approach to fill the gap.

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While No­var­tis ban­ish­es Zol­gens­ma scan­dal scars — Bio­gen goes on a Spin­raza 'of­fen­sive'

While Novartis painstakingly works to mop up the stench of the data manipulation scandal associated with its expensive gene therapy for spinal muscular atrophy (SMA) Zolgensma— rival Biogen is attempting to expand the use of its SMA therapy, Spinraza. 

The US drugmaker $BIIB secured US approval for Spinraza for use in the often fatal genetic disease in 2016. The approval covered a broad range of patients with infantile-onset (most likely to develop Type 1) SMA. 

Jason Kelly. Mike Blake/Reuters via Adobe

Eye­ing big ther­a­peu­tic push, Gink­go bags $290M to build a cell pro­gram­ming em­pire

Ginkgo Bioworks is on a roll. Days after publicizing a plan to nurture new startups via partnerships with accelerators Y Combinator and Petri, the Boston biotech says it has raised another $290 million for its cell programming platform to reach further and wider.

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UP­DAT­ED: Speak­er Nan­cy Pelosi to un­veil bill for fed­er­al­ly ne­go­ti­at­ed drug prices

After months of buzz from both sides of the aisle, Speaker Nancy Pelosi will today introduce her plan to allow the federal government to negotiate prices for 250 prescription drugs, setting up a showdown with a pharmaceutical industry working overtime to prevent it.

The need to limit drug prices is a rare point of agreement between President Trump and Democrats, although the president has yet to comment on the proposal and will likely face pressure to back a more conservative option or no bill at all. Republican Senator Chuck Grassley is reportedly lobbying his fellow party members on a more modest proposal he negotiated with Democratic Senator Ron Wyden in July.

Jeff Kindler's Cen­trex­ion re­news bid to make pub­lic de­but

Jeffrey Kindler’s plan to take his biotech — which is developing a slate of non-opioid painkillers — public, is back on.

The Boston based company, led by former Pfizer $PFE chief Kindler, originally contemplated a $70 million to $80 million IPO last year— but eventually postponed that strategy. On Wednesday, the company revived its bid to make a public debut in a filing with the SEC — although no pricing details were disclosed.

Zachary Hornby. Boundless

'A fourth rev­o­lu­tion in can­cer ther­a­pies': ARCH-backed Bound­less Bio flash­es big check, makes big­ger promis­es in de­but

It was the cellular equivalent of opening your car door and finding an active, roaring engine in the driver seat.

Scientists learned strands of DNA could occasionally appear outside of its traditional home in the nucleus in the 1970s, when they appeared as little, innocuous circles on microscopes; inexplicable but apparently innate. But not until UC San Diego’s Paul Mischel published his first study in Science in 2014 did researchers realize these circles were not only active but potentially overactive and driving some cancer tumors’ superhuman growth.

Scott Gottlieb, AP Images

Scott Got­tlieb is once again join­ing a team that en­joyed good times at the FDA un­der his high-en­er­gy stint at the helm

Right after jumping on Michael Milken’s FasterCures board on Monday, the newly departed FDA commissioner is back today with news about another life sciences board post that gives him a ringside chair to cheer on a lead player in the real-world evidence movement — one with very close ties to the FDA.

Aetion is reporting this morning that Gottlieb is joining their board, a group that includes Mohamad Makhzoumi, a general partner at New Enterprise Associates, where Gottlieb returned after stepping out of his role at the FDA 2 years after he started.

Gottlieb — one of the best connected execs in biopharma — knows this company well. As head of FDA he championed the use of real-world evidence to help guide drug developers and the agency in gaining greater efficiencies, which helped set up Aetion as a high-profile player in the game.

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