Gilead to buy CymaBay in $4.3B deal for liver disease drug

2024-02-12

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Gilead Sciences will acquire CymaBay Therapeutics and the biotechnology company’s liver disease drug in a $4.3 billion deal announced Monday.

The proposed buyout would hand Gilead an experimental medicine for primary biliary cholangitis, or PBC, a chronic condition characterized by the toxic build-up of bile acid in the liver. CymaBay disclosed Monday that the Food and Drug Administration has accepted its application for the drug, called seladelpar, and will decide on approval by mid-August.

Per deal terms, Gilead will pay $32.50 per CymaBay share, about 27% higher than the stock’s closing price Friday. While the premium is modest by biotechnology M&A standards, the takeout represents a dramatic outcome for CymaBay, which was forced into a research pivot following a clinical trial setback four-and-a-half years ago. Shares traded below $5 through the end of 2022.

“Today’s agreement with Gilead is the culmination of years of focus and determination at CymaBay to advance seladelpar and bring new hope to people living with PBC PBC and their families,” said CymaBay CEO Sujal Shah in a statement.

Gilead expects seladelpar, if approved, to boost revenue growth and, after 2025, earnings per share. It’s another dealmaking bet by company chief Daniel O’Day, who, since becoming Gilead’s head in early 2019, has negotiated a series of acquisitions and partnerships.

Many of those deals have been in oncology, including the company’s largest — a $21 billion buy of Immunomedics and its cancer drug Trodelvy. Not all have worked out as well as expected, however, and accumulating clinical trial setbacks have pushed some analysts to question Gilead’s strategy.

With CymaBay, Gilead is investing again in liver diseases, a field where it has had great success with highly effective drugs for hepatitis C.

CymaBay spent years developing seladelpar for metabolic dysfunction-associated steatohepatitis, a fatty liver condition formerly known as NASH. In mid-2019, however, a Phase 2 study of the drug failed to show a benefit reducing liver fat and, several months later, the company halted all studies on safety worries that later proved unfounded.

Since then, CymaBay has advanced seladelpar for PBC, which is estimated to affect about 130,000 people in the U.S. Bile acid build-up causes inflammation and elevations in liver enzymes that, over time, increases the risk of liver injury-related death. In the short term, the condition can cause fatigue and intense itching.

Results from a Phase 3 study of the drug showed it outperformed placebo across several measures, including biochemical response, normalization of a liver enzyme called ALP and itching relief. If approved, seladelpar would compete with Intercept Pharmaceuticals’ approved drug Ocaliva. It also faces another would-be competitor in Ipsen and Genfit’s drug elafibranor, which U.S. regulators are also reviewing.

Intercept, which also tried and failed to develop its drug for metabolic dysfunction-associated steatohepatitis, in September agreed to be bought by Italy’s Alfasigma for $800 million.

Michael Yee, an analyst at Jefferies, wrote in a Monday note to clients that seladelpar may hold advantages over Intercept’s drug, sales of which are expected to have topped $300 million last year.

Yee forecasts peak annual sales between $500 million to $1 billion for seladelpar, while the team at Cantor Fitzgerald estimates a higher peak of $2 billion.

Both companies’ boards of directors have approved the deal, which they expect to close during the first quarter of this year.