Daniel O’Day, Gilead Sciences chairman and CEO

Gilead Sciences has agreed to acquire Forty Seven for $4.9 billion cash, the companies said today, in a deal intended to boost the buyer’s immuno-oncology R&D pipeline—anchored by Forty Seven’s lead candidate magrolimab, which generated positive Phase Ib results nearly three months ago.

Magrolimab (formerly 5F9) is a monoclonal antibody being developed to treat several blood cancers, including myelodysplastic syndrome (MDS), acute myeloid leukemia (AML) and diffuse large B-cell lymphoma (DLBCL). Magrolimab is designed to target CD47, a protein that allows cancer cells to avoid destruction, thus allowing a patient’s own innate immune system to engulf and eradicate those cancer cells—an effect nicknamed “don’t eat me” by Forty Seven as well as Stanford University School of Medicine researchers that discovered the immunotherapy and successfully tested it in Phase I in 2018.

“Magrolimab complements our existing work in hematology, adding a non-cell therapy program that complements Kite’s pipeline of cell therapies for hematological cancers,” Gilead chairman and CEO Daniel O’Day said in a statement. “With a profile that lends itself to combination therapies, magrolimab could potentially have transformative benefits for a range of tumor types. We are looking forward to working with the highly experienced team at Forty Seven to help patients with some of the most challenging forms of cancer.”

The acquisition appears to follow “guiding principles for future M&A as articulated in January by O’Day during his presentation at the J.P. Morgan 38th Healthcare Conference in San Francisco:

  • “Focus on high-quality science that build upon core areas of strength.”
  • “Prioritize clinical and commercial opportunities.”
  • “Bolt-on acquisitions from small to medium in size.”

Speaking to analysts February 4 on Gilead’s quarterly earnings call, O’Day signaled the company was receptive to some additional merger-and-acquisition (M&A) deals.

“Can we grow based upon what we have in-house? Yes, I’m confident we can. And I also believe that we’re going to supplement that and de-risk that over time,” O’Day said. “But we’re going to continue to do it in the way that you’ve seen us do that with proper partnerships and proper M&A transactions to get to a portfolio strength that’s even more obvious to everybody and even more reliable and that’s going to take some time to build that and to grow it, but we are firmly committed to do that. We have the resources to be able to do it.”

Promising Phase Ib results

At the 61st American Society of Hematology Annual Meeting and Exposition, held December 7–10, 2019, in Orlando, FL, Forty Seven presented promising results of a Phase Ib trial (NCT03248479) assessing magrolimab in combination with azacitidine in untreated patients with higher risk MDS and untreated patients with AML, who are ineligible for induction chemotherapy.

As of the data cutoff of November 18, 2019, 62 patients had been treated with the combination, including 35 patients with MDS and 27 patients with AML. Forty-six patients were evaluable for response assessment, including 24 with untreated higher-risk MDS and 22 with untreated AML, who were ineligible for induction chemotherapy.

In higher-risk MDS, Forty Seven reported an objective response rate (ORR) of 92% and a complete response (CR) rate of 50% (12 of 24 patients). Eight patients (33%) achieved a marrow CR and two patients (8%) achieved hematologic improvement. The other two patients showed stable disease.

In untreated AML patients who are ineligible for induction chemotherapy, the ORR was 64%, with nine patients (41%) having achieving CR, three patients (14%) achieving a CR with complete blood count recovery (CRi), and one patient (5%) achieved a morphologic leukemia-free state (MLFS). Seven patients (32%) had stable disease and one (5%) had progressive disease.

All patients in the Phase Ib study received a 1 mg/kg priming dose of magrolimab, coupled with intrapatient dose escalation to mitigate on-target anemia. Patients were then treated with full doses of azacitidine and magrolimab maintenance doses of 30 mg/kg weekly.

In total, more than 400 patients have received the compound to date through clinical trials, Gilead and Forty Seven said.

Forty Seven is also carrying out ongoing studies of magrolimab in non-Hodgkin lymphoma (NHL) and solid tumors. Those include clinical and preclinical combination therapy studies being partnered with AstraZeneca, Eli Lilly, Merck KGaA, and Genentech, a member of the Roche Group.

Magrolimab has been granted Fast Track designation by the FDA in MDS and AML, and for the treatment of relapsed or refractory DLBCL and follicular lymphoma. Magrolimab has also been granted Orphan Drug designation by the FDA for the treatment of MDS and AML and by the European Medicines Agency for the treatment of AML.

Clinic-Bound Candidates

In addition to magrolimab, Forty Seven is developing two additional preclinical candidates set to enter the clinic this year:

  • FSI-174, an anti-cKIT antibody, is being developed in combination with magrolimab as a novel, all-antibody conditioning regimen to address the limitations of current stem cell transplantation conditioning regimens.
  • FSI-189, an anti-SIRPα antibody, is being developed for the treatment of cancer, as well as certain non-oncology settings, including transplantation conditioning.

FSI-174 is expected to enter Phase 1 this quarter and FSI-189, during the second quarter, Forty Seven said January 10.

A wholly owned subsidiary of Gilead plans to launch a tender offer to acquire all outstanding shares of Forty Seven’s common stock at $95.50 per share—a 96% premium over its closing share price of $48.79 on Thursday, when Bloomberg News first reported Gilead’s buyout offer for Forty Seven.

Consummation of the tender offer is subject to a minimum tender of at least a majority of outstanding Forty Seven shares plus Forty Seven shares underlying vested options, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions.

After successful completion of the tender offer, Gilead plans to acquire all remaining shares not tendered in the offer through a second step merger at the tender-offer price.

Investors signaled approval of the deal in early trading, with a buying surge that sent Forty Seven’s shares up 62% as of 10:22 a.m., to $93.77.

The boards of Gilead and Forty Seven have both approved the acquisition deal, which is expected to close during the second quarter, subject to regulatory approvals and other customary closing conditions.

Forty Seven agreed to pay Gilead a $160 million “termination fee” if it calls off the acquisition to accept a superior offer, according to a regulatory filing detailing the deal.

“This is an exciting day for patients who may one day benefit from future anti-CD47 therapies and other immuno-oncology treatments based on our research and an exciting time for Forty Seven as this allows us to achieve our vision of helping patients defeat their cancer,” added Mark McCamish, MD, PhD, Forty Seven’s president and CEO.

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