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.

 

IDC: Life Sci­ences Firms Must Em­brace Dig­i­tal Trans­for­ma­tion Now

Pre-pandemic, the life sciences industry had settled into a pattern. The average drug took 12 years and $2.9 billion to bring to market, and it was an acceptable mode of operations, according to Nimita Limaye, Research Vice President for Life Sciences R&D Strategy and Technology at IDC.

COVID-19 changed that, and served as a proof-of-concept for how technology can truly help life sciences companies succeed and grow, Limaye said. She recently spoke about industry trends at Egnyte’s Life Sciences Summit 2022. You should watch the entire session, free and on-demand, but here’s a brief recap of why she’s urging life sciences companies to embrace digital transformation.

Tom Barnes, Orna Therapeutics CEO

UP­DAT­ED: 'We have failed to fail': Mer­ck gam­bles $250M cash on a next-gen ap­proach to mR­NA — af­ter punt­ing its big al­liance with Mod­er­na

Merck went in deep on its collaboration with Moderna on new mRNA programs, and dropped them all over time, including their RSV partnership. But after writing off what turned out as one of the most successful infectious disease players in the business, Merck is coming in this morning with a new preclinical alliance — this time embracing a biotech that hopes to eventually outdo the famously successful mRNA in a new run at vaccines and therapeutics.

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Paul Hudson, Sanofi CEO (Eric Piermont/AFP via Getty Images)

Up­dat­ed: Hit by an­oth­er PhI­II flop, Sanofi culls breast can­cer drug — sound­ing alarm for the class

Sanofi is officially giving up on its oral SERD.

The French drugmaker put out word Wednesday morning that it will discontinue the global development program of amcenestrant, the selective estrogen receptor degrader once billed as a top late-stage prospect. Having already failed a Phase II monotherapy test earlier this year, a combo with the drug also missed the bar in a second trial for breast cancer, triggering the decision to drop the whole program.

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Etleva Kadilli, director of UNICEF’s supply division

GSK lands first-ever UNICEF con­tract for malar­ia vac­cine worth $170M

GSK has landed a new first from UNICEF the first-ever contract for malaria vaccines, worth up to $170 million for 18 million vaccine doses distributed over the next three years.

The vaccine, known as Mosquirix or RTS,S, won WHO’s backing last October after a controversial start, but UNICEF said these doses will potentially save thousands of lives every year.

“We hope this is just the beginning,” Etleva Kadilli, director of UNICEF’s supply division, said. “Continued innovation is needed to develop new and next-generation vaccines to increase available supply, and enable a healthier vaccine market. This is a giant step forward in our collective efforts to save children’s lives and reduce the burden of malaria as part of wider malaria prevention and control programmes.”

Atomwise CEO and co-founder Abraham Heifets (left) and co-founder Izhar Wallach

A cou­ple bil­lion for Ex­sci­en­tia was on­ly part of Sanofi's AI am­bi­tions, as the Big Phar­ma adds Atom­wise to the ta­ble

Sanofi made clear its AI ambitions were real at the beginning of this year when the Big Pharma took its drug discovery collaboration with Exscientia to the next level, inking a pact that could birth 15 drugs and deliver $5.3 billion to the UK partner.

Seven months later, the AI blueprint is far from over at the French Big Pharma, as another of the much-hyped drug discovery startups is coming to the table in a five-drug deal. Sanofi will pay Atomwise $20 million to kick off the hunt for up to five targets, which are aimed at leading to the creation of new small molecules. Another $1 billion is on the line — as are royalties — and the companies kept mum on the specific diseases or broader therapeutic areas of interest.

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Bayer's first DTC ad campaign for chronic kidney disease drug Kerendia spells out its benefits

Bay­er aims to sim­pli­fy the com­plex­i­ties of CKD with an ABC-themed ad cam­paign

Do you know the ABCs of CKD in T2D? Bayer’s first ad campaign for Kerendia tackles the complexity of chronic kidney disease with a play on the acronym (CKD) and its connection to type 2 diabetes (T2D).

Kerendia was approved last year as the first and only non-steroidal mineralocorticoid receptor antagonist to treat CKD in people with type 2 diabetes.

In the TV commercial launched this week, A is for awareness, B is for belief and C is for cardiovascular, explained in the ad as awareness of the connection between type 2 and kidney disease, belief that something can be done about it, and cardiovascular events that may be reduced with treatment.

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James Mock, incoming CFO at Moderna

Mod­er­na taps new CFO from PerkinElmer af­ter for­mer one-day CFO oust­ed

When Moderna hired a new CFO last year,  it didn’t expect to see him gone after only one day. Today the biotech named his — likely much more vetted — replacement.

The mRNA company put out word early Wednesday that after the untimely departure of then brand-new CFO Jorge Gomez, it has now found a replacement in James Mock, the soon-to-be former CFO at diagnostics and analytics company PerkinElmer.

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Joe Jonas (Photo by Anthony Behar/Sipa USA)(Sipa via AP Images)

So­lo Jonas broth­er car­ries Merz's new tune in Botox ri­val cam­paign

As the lyrics of his band’s 2019 pop-rock single suggest, Joe Jonas is only human — and that means even he gets frown lines. The 33-year-old singer-songwriter is Merz’s newest celebrity brand partner for its Botox rival Xeomin, as medical aesthetics brands target a younger audience.

Merz kicked off its “Beauty on Your Terms” campaign on Tuesday, featuring the Jonas brother in a video ad for its double-filtered anti-wrinkle injection Xeomin.

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Marisol Peron, Genmab SVP of communications and corporate affairs

Gen­mab launch­es cor­po­rate cam­paign am­pli­fy­ing its ‘knock your socks off’ an­ti­bod­ies

Genmab often talks about its “knock-your-socks-off” antibodies — and now the term is getting its own logo and corporate campaign.

The teal and purple logo for the acronym KYSO — Genmab pronounces it “ky-so” — debuts on Wednesday and comes on the heels of Genmab’s newly announced 2030 vision. That aspiration aims to expand Genmab’s drug development beyond oncology to include other serious diseases, while also doubling down on its own drug development.

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