On Sunday September 13, the second take out in one month in our fund was announced! Gilead announced that they have agreed to acquire Arctic Aurora LifeScience portfolio company Immunomedics for USD 21 billion.
The deal represents a market premium of 108% from Immunomedics’ Friday closing price. After a quiet first half of the year in terms of M&A, pharma and large cap biotech companies are now snapping up a number of small and mid cap biotechnology companies, with the Immunomedics deal being the largest one of the year so far.
Gilead’s latest addition to its growing number of oncology assets is owed to a drug technology called antibody drug conjugates (ADCs). An ADC is modified antibody (a type of protein that is a naturally occurring part of the immune system and that identifies bacteria and virus for example) that is coupled with a ‘warhead’ in the form of a chemotherapy agent. The designed antibody allows for at highly specific target engagement, and when the antibody has found a cancer cell it delivers the warhead in order to kill the cancer cell. This approach has given rise to Immunomedics recently approved drug Trodelvy, and also a vast line of new cancer treatments from companies such as Seattle Genetics and the partnership of AstraZeneca with Daiichi Sankyo.
Arctic Aurora LifeScience made its first investment in Immunomedics in 2016 when the drug candidate now known Trodelvy produced breakthrough clinical results in a particular type of breast cancer that do not respond to established targeted therapies, leaving patients with virtually no viable treatment alternatives. The share of Immunomedics in 2016 was appr US$ 2-3 with few believers. Today`s deal put the share to US$ 88. Gilead will now look forward to broaden the use of Trodelvy both into other types of breast cancer through combination with other drug, and look towards other cancer types altogether where early clinical data has looked encouraging. For Gilead, this deal comes in accordance with their strategy of bolt on acquisitions growing their oncology franchise. Positive immediate addition to their growth.