CD47 is worth $4.9bn to Gilead
A $4.9bn buyout of Forty Seven means that Gilead remains focused on oncology, though cell therapy bulls are none the wiser.
Daniel O’Day, appointed chief executive of Gilead last year, has spoken, and judging by his company’s $4.9bn acquisition of Forty Seven today the message is clear: Gilead wants to boost its place in oncology, and is prepared to pay top dollar to do it.
An immediate beneficiary, though from a much lower base, was Forty Seven’s CD47-focused peer Trillium, which stands up 140% since Bloomberg on Thursday broke the news that Forty Seven was to be acquired. The news is less good for the cell therapy company Iovance, which was also rumoured to have been in Gilead’s crosshairs, but which so far has been left out in the cold.
One surprising aspect of the Forty Seven buyout is that just over a year ago targeting CD47 as a novel immuno-oncology mechanism looked dead and buried after Celgene terminated its anti-CD47 MAb CC-90002. But Forty Seven’s magrolimab stood out from the pack, posting highly promising myelodysplastic syndromes (MDS) data at last year’s Ash meeting.
Indeed, the Ash data seem to have triggered today’s buyout (Forty Seven bucks the trend, January 23, 2020). On an analyst call today Mr O’Day said he was present at the meeting, and had been particularly impressed by what he saw from Forty Seven.
And the all-cash $4.9bn price, valuing Forty Seven at $95.50 a share, is remarkable. The Bloomberg rumour prompted a 19% surge to $58.00 on Friday, and just four months ago Forty Seven stock had been changing hands for under $6.00.
Gilead management said the bidding process for Forty Seven was competitive, but did not reveal details. They said more about this, as well as the size of the deal’s break fee, would be detailed in regulatory filings.
|Project||2024e sales||Peak sales||NPV||Key study|
|Magrolimab||$285m||$2.96bn||$1.04bn||Azacytidine combo in MDS (92% ORR) & AML (64% ORR)|
Interestingly, given how much work CD47-focused companies like Trillium and Surface Oncology have devoted to tweaking antibody design and to deciding which end of the CD47 pathway to target, Gilead put Forty Seven’s strength down to having optimised magrolimab’s dosing and hitting an ideal risk/benefit profile.
Mr O’Day offered little insight into what made Forty Seven different from other CD47 players, merely highlighting the fact that the company had the most mature dataset. Depending on the results of an MDS study getting under way imminently, magrolimab could reach the US market under accelerated approval by the end of 2022, he said.
It is MDS that Gilead will initially focus on, but lymphoma could provide a separate development path, especially in combination with the Car-T therapy Yescarta. If this is how Gilead sees its Kite cell therapy business being bolstered it could disappoint those betting on a Gilead takeout of Iovance, though of course other buyers could come forward.
Apart from anything else Iovance’s TIL technology faces questions over patentability (Iovance bulls should focus on execution, February 26, 2020). In contrast targeting CD47 offers a more traditional antibody product approach; and, while Forty Seven had been mired in patent litigation against Synthon, this was settled in 2018.
That, in hindsight, looks to have been a very smart move.