Gilead Sciences To Buy Calistoga Pharmaceutical

Gilead Sciences continues its two-year shopping spree. The Foster City, Calif., firm will shell out up to $600 million for Calistoga Pharmaceuticals, a Seattle-based biotech developing small molecules that target the phosphoinositide-3 kinase (PI3K) pathway. Privately-held Calistoga scores $375 million initially, and could gain another $225 million if regulatory and sales milestones for its lead compound, CAL-101, are a hit.

The acquisition adds a key oncology compound to Gilead's late-stage pipeline. CAL-101 blocks PI3K-delta, an enzyme overexpressed in many blood cancers. The drug will start Phase II trials in non-Hodgkin's lymphoma later this year, and Gilead believes that study will enable it to file for regulatory approval in 2013. "We see this compound as one of the more promising emerging oncology assets," Leerink Swann analyst Joshua Schimmer said today in a note to investors.

The Calistoga deal adds to a series of acquisitions by Gilead, which is intent on expanding its portfolio beyond its stable of drugs for infectious diseases, some of which will face generic competition in the coming years.

In December, Gilead bought Arresto Biosciences, a Palo Alto-based biotech that marked Gilead's first foray into monoclonal antibody technology. The $225 million purchase brought AB0024, an antibody being developed to treat idiopathic pulmonary fibrosis and advanced solid tumors. This summer, CGI Pharmaceuticals, which focuses on small molecule protein kinase inhibitors, was brought into the Gilead fold. And in 2009, Gilead made its biggest move with the $1.4 billion purchase of CV Therapeutics, a developer of small molecule drugs for cardiovascular disease.

Calistoga was spun-out of a drug development program from Icos, which was acquired by Eli Lilly in 2007. Gilead expects to close the transaction in the second quarter.