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Gilead Buys Myogen

Hot drug prospect justifies $2.5 billion sale price, Gilead says

by Michael McCoy
October 9, 2006 | A version of this story appeared in Volume 84, Issue 41

Gilead Sciences has agreed to acquire the Denver-based biotechnology firm Myogen for about $2.5 billion. The purchase, expected to close by the end of the year, will expand Gilead's portfolio with ambrisentan (shown), a small-molecule drug for pulmonary arterial hypertension (PAH) that has completed two Phase III clinical trials.

The purchase is Gilead's second in recent months aimed at expanding its portfolio beyond its two core HIV treatments. In August, the company completed the $365 million acquisition of Corus Pharma, a developer of drugs for respiratory and infectious diseases.

Gilead will pay $52.50 per share for Myogen's stock, a steep 50% premium over its closing price on the day before the deal was announced. In a conference call with stock analysts, Gilead Chief Financial Officer John F. Milligan justified the high price by pointing to other bidders for the company and "the scarcity value associated with products in late stage." Myogen expects to file a New Drug Application for ambrisentan by the end of the year.

According to Myogen, PAH is characterized by constriction of the blood vessels in the lungs, a condition that leads to high pulmonary arterial pressures. Ambrisentan, an endothelin receptor antagonist, blocks the negative effects of endothelin, a small peptide hormone associated with blood vessel narrowing.

Gilead executives say ambrisentan has a better safety profile than Tracleer, the one endothelin receptor antagonist now on the market. Tracleer, marketed by the Swiss firm Actelion, had $339 million in first-half 2006 sales, up 48% over the first half of 2005. Analysts at Friedman, Billings, Ramsey & Co. predict that ambrisentan could hit annual sales of $600 million.


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