Gilead Sciences Acquires CymaBay Therapeutics for $4.3 Billion
Gilead Sciences, Inc. has announced its plans to acquire CymaBay Therapeutics, Inc. for $4.3 billion in a move to bolster its liver disease portfolio. The deal, approved by both companies’ boards, is expected to be completed in the first quarter of 2024, pending necessary regulatory approvals.
This acquisition will bring Gilead the addition of CymaBay’s lead product candidate, seladelpar, which is currently being investigated for the treatment of primary biliary cholangitis (PBC). Seladelpar has received priority review by the U.S. Food and Drug Administration (FDA) and is awaiting a final decision on its approval by August 14, 2024. PBC, a rare chronic liver disease affecting around 130,000 individuals in the U.S., primarily impacts women.
Seladelpar, a selective peroxisome proliferator-activated receptor delta (PPARδ) agonist, has shown promising results in Phase 3 trials. It has demonstrated statistical significance over placebo in primary composite endpoints and significant improvement in pruritus, a common symptom of PBC.
Daniel O’Day, Chairman and CEO of Gilead Sciences, is optimistic about the potential of seladelpar to address the unmet needs of PBC patients. Sujal Shah, President and CEO of CymaBay, expressed confidence in Gilead’s ability to swiftly bring seladelpar to patients in need.
Gilead’s offer for CymaBay’s common stock represents a 27 percent premium to its closing share price on February 9, 2024. The acquisition is expected to enhance Gilead’s revenue growth and is predicted to have a neutral impact on earnings per share in 2025, with potential for accretion thereafter.
However, the completion of this acquisition is contingent on a minimum tender of a majority of CymaBay’s outstanding shares and other customary closing conditions, including approval under the Hart-Scott-Rodino Antitrust Improvements Act.
Gilead Sciences remains financially strong and operationally sound despite this strategic move. Management has actively repurchased shares, highlighting their commitment to enhancing shareholder value. Additionally, Gilead has consistently raised its dividend for 9 consecutive years, providing a reliable income stream for shareholders.
From a valuation perspective, Gilead appears undervalued when comparing its price-to-earnings (P/E) ratio to its near-term earnings growth. With a P/E ratio of 16.4 and an adjusted P/E ratio of 12.19 for the last twelve months, Gilead shows potential for significant earnings growth. Furthermore, the company’s valuation suggests a strong free cash flow yield, indicating a healthy financial position with ample cash generation. This bodes well for the seamless integration of CymaBay’s assets and future growth prospects.
All eyes are now on Gilead Sciences as it expands its liver disease portfolio and strengthens its position in the pharmaceutical industry.
Analyst comment
Positive news: Gilead Sciences’ announcement to acquire CymaBay Therapeutics for $4.3 billion is a significant move that will bolster its liver disease portfolio. The addition of seladelpar, a promising treatment for primary biliary cholangitis, is expected to address unmet needs of patients. The acquisition is predicted to have a neutral impact on earnings per share in 2025, with potential for future growth. Gilead’s strong financial position and track record of rewarding shareholders contribute to a positive outlook. The market is likely to view this move favorably, anticipating future growth and shareholder value.
