Gilead Sciences has agreed to acquire CymaBay Therapeutics for $4.3 billion, the companies said today, in a deal designed to deepen the buyer’s portfolio with a treatment for a form of liver disease that is under FDA review and could win approval this summer.

The treatment, seladelpar, is an oral, selective peroxisome proliferator-activated receptor delta (PPARδ) agonist indicated to treat primary biliary cholangitis (PBC) including pruritus. In September, CymaBay announced that seladapar generated positive data in the pivotal Phase III RESPONSE trial (NCT04620733), by achieving statistical significance over placebo across primary composite endpoints of:

  • Biochemical response (61.7% for patients on seladelpar vs. 20.0% for placebo).
  • Normalization of alkaline phosphatase (ALP) at 12 months (25.0% for patients on seladelpar vs. 0.0% for placebo).
  • Improvement in pruritus at six months among people living with moderate-to-severe itch, a result that was sustained through 12 months.

“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 and their families,” Sujal Shah, CymaBay’s president and CEO, said in a statement.

Also today, the FDA accepted CymaBay’s new drug application (NDA) for seladelpar, granted the application a priority review that will shorten the agency’s review timeframe from 10 to six months, and set a Prescription Drug User Fee Act (PDUFA) target action date of August 14.

Seladelpar previously received the FDA’s Breakthrough Therapy Designation, the European Medicines Agency (EMA)’s PRIME status (EMA), and the orphan drug designations of both regulatory agencies.

Seladelpar is projected to generate sales of $1.9 billion by 2029, according to the London Stock Exchange Group (LSEG), though Jefferies equity analyst Michael J. Yee has estimated the drug “could bring in $500M to $1B+ in peak sales.”

“This is a logical tuck-in deal which squarely fits into GILD’s liver franchise,” Michael Yee, an equity analyst with Jefferies, wrote this morning in a research note. “We view this as an incremental positive to the top-line w/o sig[nificant] risk (pending FDA approval in Aug.) and in-line w/ mgmt [management] commentary for tuck-in deals.”

“There is synergy with GILD’s existing liver franchise with Hepatitis and GILD already has access to 80% of the PBC prescribers,” Yee added.

Investors responded to news of the acquisition by sending CymaBay shares surging 25% in early trading on the Nasdaq Global Select Market, to $32.10 as of 1 p.m. from $25.69 at the closing bell Friday. Also on the Nasdaq Global Select Market, Gilead shares inched up 0.75% from $73.67 to $74.22.

“Poetic closure” to comeback

Andy T. Hsieh, PhD, biotechnology research analyst with William Blair, said Gilead’s acquisition “represents a poetic closure” to CymaBay’s comeback following the setback it suffered in 2019, when the company stopped clinical development of the drug in both PBC and non-alcoholic steatohepatitis (NASH)—now known as metabolic dysfunction-associated steatohepatitis or MASH.

The development halt came after biopsies of some 30% of patients in a Phase IIb NASH/MASH trial showed atypical histological findings in the form of an interface hepatitis presentation, with or without biliary injury. That led to an FDA clinical halt, followed by CymaBay eliminating some 60% of its workforce in December 2019 and launching a strategic review of its options.

The FDA clinical halt was lifted in 2020 when an investigation by independent liver experts and pathologists concluded that the unusual histology findings existed in the patients before they enrolled in the trial.

“Management was forced to make difficult operational decisions following the emergence of atypical histological findings from the Phase II nonalcoholic steatohepatitis study. We commend management’s resilience and persistence that ultimately led to seladelpar demonstrating the best-in-class clinical profile in PBC, and we expect the drug to benefit thousands of patients living with PBC as soon as later this year,” Hsieh wrote in a research note.

While Hsieh previously valued CymaBay at $2.9 billion, the higher price Gilead agreed to pay for it makes it unlikely that another bidder will emerge, he added. Hsieh downgraded William Blair’s rating of CymaBay from “Outperform” to “Market Perform.”

Head-on competition

Yee noted that Seladapar will compete head-on with Ocaliva® (obeticholic acid), a farnesoid X receptor (FXR) agonist that is also indicated for PBC. Ocaliva’s indication applies to patients without cirrhosis or with compensated cirrhosis who do not have evidence of portal hypertension, either in combination with ursodeoxycholic acid (UDCA) with an inadequate response to UDCA, or as monotherapy in patients unable to tolerate UDCA.

“CBAY differentiates w/ statistically significant reduction in pruritus from baseline and had better ALP efficacy biomarker reductions (and compared to ICPT cross-trial comparisons),” Yee observed.

Ocaliva was developed by Intercept Pharmaceuticals, which won FDA approval for the drug in 2016. Intercept was acquired by privately-held Italian drug developer Alfasigma for $794 million in a deal completed in November 2023. Ocaliva generated $151,676 million in net sales during the first half of 2023, up 16% from $130.903 million a year earlier.

Last summer, Intercept raised its guidance to investors to project between $320 million and $340 million in 2023 net sales, up from between $310 million and $340 million.

Gilead reasons that seladapar complements its existing portfolio of liver drugs, which is led by the chronic hepatitis C treatment Epclusa® (sofosbuvir and velpatasvir), whose 2023 net sales inched up to $1.537 billion, up about 0.5% from $1.53 billion the previous year. Those figures include sales of an authorized generic version of Epclusa sold by a Gilead subsidiary, Asegua Therapeutics.

Second highest in sales among Gilead liver disease drugs is the chronic hepatitis B virus drug Vemlidy® (tenofovir alafenamide), which saw a 2% rise in net sales during 2023, to $862 million from $842 million in 2022.

Declining portfolio sales

Despite these gains, Gilead is looking to reverse declining sales within the whole of its liver drug portfolio last year as a key reason for acquiring CymaBay.

Gilead acknowledged that net sales of its liver drug portfolio dipped 1% last year, from $2.798 billion to $2.784 billion, in reporting fourth quarter and full-year 2023 results on February 6. Those results include the $691 million Gilead racked up in Q4 2023, down 0.4% from $694 million in the year-ago quarter.

Among Gilead liver drugs seeing year-over-year sales declines:

  • Viread® (tenofovir disoproxil fumarate), down 9% from $91 million in 2022 to $83 million last year.
  • Harvoni® (ledipasvir and sofosbuvir), down 39% from $115 million to $70 million.

The company blames its decreases during 2023 on unfavorable pricing dynamics, offset by higher demand across drugs indicated for chronic hepatitis C virus (HCV) and chronic hepatitis delta virus (HDV).

Gilead commands a liver drug market share of more than 60% in the U.S. and over 50% in Europe, chief commercial officer Johanna Mercier told analysts on the company’s quarterly earnings call.

Gilead expects to build on that market share by acquiring CymaBay and seladelpar. At $32.50 per share cash, Gilead’s offer for acquiring CymaBay represents a 27% premium to CymaBay’s closing share price on Friday. Following successful completion of the tender offer, Gilead plans to acquire all remaining shares not tendered through a second step merger at the same price as in the tender offer.

Gilead projects that the deal will be approximately neutral to earnings per share (EPS) in 2025 and add to EPS significantly thereafter.

“We are looking forward to advancing seladelpar by leveraging Gilead’s long-standing expertise in treating and curing liver diseases,” said Daniel O’Day, Gilead’s chairman and CEO. “Building on the strong research and development work by the CymaBay team to date, we have the potential to address a significant unmet need for people living with PBC and expand on our existing broad range of transformational therapies.”

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