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Gilead captures Kite in $11.9bn deal

Published on 29/08/17 at 09:22am

Gilead had long been expected to make a serious acquisition to boost flagging growth and it finally made a move by announcing its plan to takeover Kite Pharma in an $11.9 billion deal. The move allows them access to the ground-breaking CAR-T therapy that has seen Kite emerge, alongside Novartis, as a frontrunner in the field.

Kite is expected to receive approval for its CAR-T therapy in the next few months and it has already been tipped to reach $2 billion in peak sales. This alone is not enough to justify the large asking price, however, it is known to be working on the next generation of therapies in the field.

Gilead is gambling that these developments and the existing treatment currently in front of the FDA will see it emerge as a leader in the new area. The decision to purchase Kite now, despite its treatment still being evaluated by the FDA, is reported to have been based on the strong data it has been privy to.

“The acquisition of Kite establishes Gilead as a leader in cellular therapy and provides a foundation from which to drive continued innovation for people with advanced cancers,” said John F. Milligan, Gilead’s President and Chief Executive Officer. “The field of cell therapy has advanced very quickly, to the point where the science and technology have opened a clear path toward a potential cure for patients. We are greatly impressed with the Kite team and what they have accomplished, and share their belief that cell therapy will be the cornerstone of treating cancer. Our similar cultures and histories of driving rapid innovation in order to bring more effective and safer products to as many patients as possible make this an excellent strategic fit.”

When CAR-T treatments do reach patients, it is likely that the price point is going to be particularly high. Drugs within oncology are notoriously expensive and the method of developing these kinds of treatments is especially complicated.

The therapy is manufactured from patient’s own immune cells, in order to engineer them to attack cancer cells within the body. It means that each treatment is essentially personalised to the patients and has to be done on a case-by-case basis.

This means that the treatment will carry a huge cost, with some figures mooted as high as $650,000 figure per patient. A lot will depend on Novartis, after it achieved the first approval, and its decision on price will alter Gilead’s approach.

It would not be the first time that Gilead had managed the launch of an expensive drug, as its Hepatitis C drugs have largely funded this takeover due to the sales they reaped for the company. Sovaldi, the first of Gilead’s Hep C treatments, entered the market at $1,000 per pill and cost $84,000 per course of treatment.

Now, uptake of the Hep C treatments has died down as more and more patients are cured, denting sales and leading to investors crying out for an acquisition. Gilead has dutifully complied and will be hoping that the capture of Kite will allow it to create growth in the company again.

Ben Hargreaves

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