Gilead shows belief in its partner's cancer treatment with $7.8 billion buyout

By Tomi KilgoreJaimy Lee

Arcellx's stock is heading into record territory as the merger deal is for more than double the biotech's market cap

Arcellx's stock is heading toward a record after the $7.8 billion deal to be acquired by Gilead.

Shares of Arcellx shot up toward a fresh record in early Monday trading, after Gilead Sciences agreed to buy the shares it doesn't already own of the biotechnology company, in a deal with an equity value of $7.8 billion.

Gilead (GILD) has been working with Arcellx (ACLX) since 2022 to develop the biotech's lead candidate, a CAR-T therapy called anito-cel that's used to treat multiple myeloma. Given what the companies believe are "deep and durable" responses in Phase 1 and Phase 2 trials, the treatment could be approved for sale by the U.S. Food and Drug Administration in December.

Under the terms of the deal, Gilead, which currently owns 11.5% of the Arcellx shares outstanding, will pay Arcellx $115 for each share it doesn't own. That represents a 79.4% premium to Friday's closing price of $64.11. It is also above the stock's record closing price of $106.53 on Nov. 11, 2024.

The bid also includes a contingent value right of $5 per share if anito-cel reaches global sales of at least $6 billion from launch through 2029.

The $7.8 billion equity value of the deal is more than double Arcellx's market capitalization of $3.71 billion at Friday's close.

Gilead "gaining the full rights to a synergistic asset they have been enthusiastic about for a fair price makes some strategic sense and likely won't come as a major surprise for many," RBC Capital Markets analyst Brian Abrahams told investors Monday morning, "though [it] does not alter GILD's go-forward top-line nor add any new dimensions to the story."

Arcellx shares ran up 77.8% in premarket trading. Gilead's stock slipped 1.1%.

"This agreement reflects our conviction in the potential of anito-cel and our intention to move with speed so we can make the most of that potential for patients with multiple myeloma," said Gilead CEO Daniel O'Day. "Beyond the potential launch this year, anito-cel could become a foundational treatment for multiple myeloma over time, including earlier lines of therapy."

Anito-cel is a BCMA-directed CAR T-cell therapy. Back in 2019, Gilead spent $11.9 billion to buy another CAR-T developer called Kite Therapeutics, which had one of the first CAR-T therapies ever approved by the FDA.

The Arcellx deal is expected to close during the second quarter of this year. If the FDA approves anito-cel, Gilead said the deal would start adding to its earnings per share in 2028. If approved, anito-cel could bring in $160 million in sales in 2027 and eventually up to $5 billion, according to RBC Capital Markets analysts.

"Anito-cel's potential best-in-disease profile, combined with Kite's exceptional manufacturing capabilities and industry-leading turnaround times, puts us in a favorable position ahead of a potential commercial launch," Johanna Mercier, Gilead's chief commercial and corporate affairs officer, said during a recent earnings call.

Prior to the deal announcement, Arcellx's stock had edged up 0.6% over the past 12 months, while Gilead shares have rallied 37.7% and the S&P 500 index SPX has advanced 14.9%.

-Tomi Kilgore -Jaimy Lee

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

02-23-26 0822ET