Gilead Sciences said it has agreed to acquire Immunomedics for approximately $21 billion, in a blockbuster deal designed to bolster the buyer’s oncology portfolio with a first-in-class breast cancer treatment that won FDA accelerated approval in April.

The acquisition will bring to Gilead TrodelvyTM (sacituzumab govitecan-hziy), a first-in-class Trop-2 directed antibody-drug conjugate (ADC) indicated for the treatment of adults with metastatic triple-negative breast cancer (mTNBC) who have received at least two prior therapies for metastatic disease.

Trodelvy was launched in May of 2020 and according to Gilead has significant commercial potential in mTNBC and other solid tumors.

“We will now continue to explore its potential to treat many other types of cancer, both as a monotherapy and in combination with other treatments,” Gilead chairman and CEO Daniel O’Day said yesterday in a statement. “We look forward to welcoming the talented Immunomedics team to Gilead so we can continue to advance this important new medicine for the benefit of patients with cancer worldwide.”

O’Day added that the acquisition “represents significant progress in Gilead’s work to build a strong and diverse oncology portfolio,” to which he said Trodelvy will be foundational.

Gilead has built an oncology franchise in recent years by winning approvals in July for Tecartus™ (brexucabtagene autoleucel), the first and only approved chimeric antigen receptor T cell (CAR-T) therapy for the treatment of adult patients with relapsed or refractory mantle cell lymphoma (MCL)—as well as for its Kite subsidiary’s CAR-T treatment Yescarta®—the latter in 2017, just 15 days after completing its approximately $11.9 billion acquisition of Kite, now a Gilead subsidiary.

Full speed ahead

To that end, Immunomedics said it planned to pursue a full U.S. approval of Trodelvy in the fourth quarter of 2020 by submitting a supplemental BLA—to be followed in the first half of 2021 by a marketing authorization application to the European Medicines Agency.

The accelerated approval granted by the FDA requires additional clinical trials designed to verify and detail Trodelvy’s clinical benefit. Through accelerated approval, the FDA approves drugs for serious conditions designed “to fill an unmet medical need based on a result that is reasonably likely to predict a clinical benefit to patients.”

Upon completion of the acquisition deal, which is expected to close during the fourth quarter of 2020, Gilead will retain global rights to Trodelvy worldwide except for greater China, South Korea, and certain Southeast Asian countries.

Gilead said it intends to launch numerous additional mid- and late-stage studies in the near term to determine which patients will benefit from Trodelvy as both a monotherapy or in combination with other products. Gilead reasons that it can rapidly advance Trodelvy through development through its commercial, medical, regulatory and manufacturing expertise—as well as its established infrastructure and operations in Europe and Japan.

This weekend at the European Society for Medical Oncology (ESMO) Virtual Congress 2020, to be held September 19–21, Immunomedics plans to present detailed results from the Phase III ASCENT trial (NCT02574455), which was halted early due to efficacy based on the unanimous recommendation of the independent Data Safety Monitoring Committee. Immunomedics said Trodelvy significantly improved progression-free survival (PFS) and overall survival (OS) in previously treated patients with advanced mTNBC.

Also at ESMO, Immunomedics plans to present additional clinical data for Trodelvy in bladder cancer and other solid tumors.  Trodelvy is also being studied in an ongoing Phase III trial (NCT03901339) in third line HR+/HER2- breast cancer and a registrational Phase II study (NCT03547973) in bladder cancer. Additional ongoing studies are evaluating the potential of Trodelvy as a treatment for non-small cell lung cancer and other solid tumor types. Trodelvy is being studied as both a monotherapy and in combination with checkpoint inhibitors and other non-immuno-oncology products by Immunomedics and independent investigators.

Gilead said Trodelvy will immediately accelerate Gilead’s revenue growth, while its planned Immunomedics acquisition will at worst have no effect and at best add to Gilead’s non-GAAP earnings per share in 2023. After that year, the acquisition would add “significantly” to revenue, the company added.

Resurgence in ADCs

Trodelvy generated $20 million in the second quarter, its first quarter of sales, Geoffrey C. Porges, MBBS, director of therapeutics research and a senior research analyst at SVB Leerink, wrote in an investor note.

“The IMMU acquisition adds to the impression of resurgent interest in ADC’s amongst large biopharma companies,” Porges wrote, adding that Seattle Genetics, AstraZeneca, and GlaxoSmithKline and other biopharmas “have been able to create significant value from what was previously viewed as an outdated technology.”

Gilead agreed to pay $88 a share cash for Immunomedics, representing a 108% premium to Immunomedics’ closing price on September 11.

A wholly-owned subsidiary of Gilead will promptly commence a tender offer to acquire all of the outstanding shares of Immunomedics’ common stock. Following successful completion of the tender offer, Gilead will acquire all remaining shares not tendered in the offer through a second step merger at the same price as the tender offer.

The tender offer will be funded through approximately $15 billion in cash on hand, as well as approximately $6 billion in newly issued debt. Gilead said it expected to retain an investment grade credit rating following this transaction, and that the acquisition would not change its capital allocation strategy or its commitment to maintain and grow its dividend over time.

Gilead said the consummation of the tender offer is subject to various conditions, including a minimum tender of at least a majority of outstanding Immunomedics shares, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions.

“This acquisition represents significant progress in Gilead’s work to build a strong and diverse oncology portfolio,” O’Day said. “We look forward to welcoming the talented Immunomedics team to Gilead so we can continue to advance this important new medicine for the benefit of patients with cancer worldwide.”

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