Gilead Agrees to Purchase Myogen
Gilead Sciences Inc., the world’s third-biggest biotechnology company, said Monday that it had agreed to acquire Myogen Inc. for $2.5 billion in a transaction that gives Gilead access to Myogen’s experimental hypertension drugs.
The deal -- the latest in a flurry of acquisitions in the drug sector -- represents a big bet for Foster City, Calif.-based Gilead, which mainly makes HIV drugs. The company has little experience in other diseases, and some analysts are surprised that the company is straying so far from its core competency.
“This is surprising in that there are no major synergies with Gilead’s current franchises,” said Philip Nadeau, an analyst at Cowen & Co. “It’s a new area for them.”
Shares of Myogen, based in Westminster, Colo., rose nearly 47%, and Gilead’s shares fell more than 6%.
Gilead agreed to pay $52.50 a share for Myogen, a 50% premium over its closing stock price Friday, to acquire the company’s experimental drug ambrisentan for pulmonary arterial hypertension, a condition in which high blood pressure in the arteries of the lungs leads to shortness of breath, chest pain and, ultimately, heart failure.
“You have to worry that this is a signal that Gilead thinks they didn’t have enough runway in the HIV area in particular or in infectious diseases generally,” said Geoffrey Porges, an analyst at Sanford C. Bernstein & Co.
Gilead executives, in a conference call with analysts, said the hefty premium was justified by the scarcity of promising experimental drugs in late stages of development.
Myogen expects to file for marketing approval of ambrisentan with the Food and Drug Administration before the end of the year. If approved, the drug could generate annual sales of more than $1 billion, analysts estimate.
Ambrisentan is one of a class of drugs known as endothelin receptor antagonists. Elevated levels of the peptide hormone endothelin are associated with several cardiovascular conditions including PAH, the firms said.
Myogen is racing against Encysive Pharmaceuticals Inc. of Houston to produce a drug that would compete with Tracleer, an endothelin receptor antagonist made by Swiss company Actelion.
The annual market for pulmonary arterial hypertension drugs is expected to grow to $2.5 billion by 2011, Nadeau said, with the endothelin receptor antagonists accounting for about $1.2 billion.
Shares of Myogen rose $16.36, or 46.6%, to close at $51.44 on Monday. Gilead’s shares fell $4.49, or 6.5%, to $64.28.
