Firm finds Gilead’s $20 per share offer more appropriate than Astellas’ $16 bid made last month.

Gilead Sciences plans to pay $1.4 billion for CV Therapeutics, or $20 per share, in cash. The acquisition will expand Gilead’s activities in cardiovascular diseases.

Last month, CV Therapeutics turned down Astellas Pharma’s $1 billion offer to take over the company. The Astellas’ offer was made at $16 per share. CV Therapeutics opened trading today at $20.55. 

“The highest and best use of CV Therapeutics assets is with Astellas, since Lexiscan can leverage Ranexa’s sales force to expand its footprint among general cardiologists,” according to Joseph P. Schwartz and Eric Varma, M.D., also analysts from Leerink Swann. “ We would not be surprised to see Astellas offer $22 to 24 per share to close a deal with CV Therapeutics.”

If the deal with Gilead does go through, however, CV Therapeutics will become its wholly owned subsidiary. The transaction is expected to be dilutive to Gilead’s earnings in 2009, neutral to accretive in 2010, and accretive in 2011 and beyond. 

CV Therapeutics has two marketed products, which significantly contributed to last year’s revenues of $154.5 million. Ranexa® is indicated for chronic angina, and Lexiscan® injection is used as a pharmacologic stress agent in radionuclide myocardial perfusion imaging in patients unable to undergo adequate exercise stress. 

CV Therapeutics’ pipeline includes compounds being evaluated for the treatment of atrial fibrillation, pulmonary diseases, and diabetes. Two are in Phase III, two in Phase I, and there are about six programs in discovery and preclinical development.

Gilead has two marketed cardiovascular drugs. “We believe Gilead’s proposed acquisition of CV Therapeutics makes significant strategic sense as it allows the company to forward integrate into the cardiovascular drug market ahead of the potential launch of its refractory hypertension drug darusentan,” notes William Tanner, equity research analyst also at Leering Swann. 

“Gilead management has opined to us that they would likely commercialize darusentan with a specialist-focused sales force numbering approximately 250 to 300 reps,” he adds. “Thus, CV Therapeutics’ 170 Ranexa sales reps provides Gilead with a meaningful start.”

Schwartz and Varma counter that, “An acquisition of CV therapeutics poses a higher execution risk for Gilead than Astellas, in our view. Darusentan is still in late-stage clinical development, and while we believe it has a high likelihood of success, its failure would eliminate many potential synergies of this deal.”

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