Global Insight Perspective | |
Significance | This is new territory for Gilead, which has traditionally kept its focus on infectious diseases. It is also the second acquisition for the biotech firm in as many months. |
Implications | The premium that Gilead paid is clearly aimed at gaining Myogen’s cardiovascular pipeline, particularly with ambrisentan expected to make a strong debut in the pulmonary hypertension market soon. |
Outlook | The high price of the deal will mean that Gilead’s profits will be pressured until ambrisentan achieves its full potential. As it is also entering a new area, the next few quarters will be a testing time for Gilead. |
U.S. biotech firm Gilead Sciences has made a foray into a new segment with the acquisition of Myogen Inc in an all-cash deal worth US$2.5 billion. The two-step acquisition and merger will see the Denver firm absorbed into Gilead and operating as a wholly-owned subsidiary once the transaction is completed. Gilead warned that the deal size is only expected to increase company earnings per share from 2010.
The highlight of the deal is Myogen’s cardiovascular drugs pipeline, which consists of two products, and is led by pulmonary arterial hypertension (PAH) treatment ambrisentan. The lead product is currently completing phase III studies, and Myogen is expected to file a New Drug Application (NDA) with the FDA in the fourth quarter of 2006. The drug is touted as billion dollar product, and is in direct competition with Actelion’s Tracleer, according to Reuters. The other late-stage product, darusentan, is an endothelin receptor antagonist for treating resistant hypertension. It has not generated enough excitement for Gilead, which maintains that the future focus of the product will be determined by the results of the clinical trials. Apart from the two pipeline drugs, Gilead has also inherited Flolan ® (epoprostenol sodium). This is an intravenous product for the treatment of primary pulmonary hypertension, which Myogen markets and distributes through an agreement with GlaxoSmithKline.
:
Gilead’s R&D Pipeline | ||
Product/Candidate | Indications | Clinical Trial Development |
Tenofovir fumarate disoproxil | Chronic Hepatitis B | Phase III |
Aztreonam lysine for inhalation | Cystic Fibrosis | Phase III |
GS 9137 | HIV/AIDS | Phase II |
GS 9132 | Hepatitis C | Phase I |
Corus 1040 | Respiratory Infections | Preclinical |
Protease and Polymerase inhibitors | Hepatitis C | Preliminary Research |
Small Molecule therapeutics | Viral Infections | Preliminary Research |
Small molecule therapeutics | Lymphatic System | Preliminary Research |
Inhaled therapeutics | Respiratory Infections | Preliminary Research |
Source: Gilead Sciences | ||
The U.S. biotech hopes to build on its last acquisition of privately-held biotech firm Corus Pharma. Gilead gained 100% control of the company in July this year when it bought Corus for US$365 million. In particular, it inherited Corus’ lead molecule Cayston (aztreonam lysine for inhalation). This is an inhaled antibiotic with activity against gram-negative bacteria, including Pseudomonas aeruginosa, which can cause lung infections in people suffering with Cystic Fibrosis (see United States: 20 July 2006:Gilead Exercises Option to Buy Corus Pharma).
Outlook and Implications
It is clear that Gilead’s aim is to broaden its portfolio in a highly competitive biotech market. However, the fact that it has entered a segment it has virtually no prior experience of does generate some teething problems for the U.S. biotech straightaway. The segment is already considered crowded, with ample presence from Big Pharmas such as Pfizer and GlaxoSmithKline. They will compete with Gilead’s acquired and potential pipeline brands, putting further pressure on the firm. Gilead’s acquisition spree is also influenced by the recent spate of deals in the biotechnology industry. The two most recent transactions highlight the changes in the industry. Massachusetts biotech Millennium Pharmaceuticals bought out Canada's AnorMed Inc. for US$515 million, while biotech giant Amgen is engaged in a US$386 million acquisition of Avidia (see United States: 2 October 2006:Amgen to Boost Pipeline With Avidia Acquisition). The primary target for these cash-rich U.S. pharma firms is acquiring late-stage drugs to bolster future earnings. For Gilead, ambrisentan presents a blockbuster opportunity, but the firm’s new footing means that the maximum potential for marketing and distribution will have to be realised through alliances.