Cash Is King
On Sunday, Gilead announced that it will acquire biotech company Immunomedics for a whopping $21 billion dollars in a deal that will augment Gilead’s portfolio of cancer treatments.
Immunomedics is known for its drug Trodelvy. Trodelvy is an FDA-approved treatment for metastatic triple-negative breast cancer. Gilead CEO Daniel O’day stated “Trodelvy is an approved, transformational medicine for a form of cancer that is particularly challenging to treat, we will now continue to explore its potential to treat many other types of cancer, both as a monotherapy and in combination with other treatments.” Gilead has the chance to innovate and improve the drug to ultimately provide better treatment for patients.
Gilead said it will be acquiring Immunomedics shares at $88 each! This equates to a total value of $21 billion dollars. The company has issued $6 billion dollars of newly issued debt to pay for the deal and the remaining $15 billion will be funded through about $15 billion in cash on hand.
As the pandemic continues to weaken demand for some drugs, the availability of cancer treatments is still one you can unfortunately bank on. Gilead’s sales fell 10% during the second quarter so the need to diversify its oncology portfolio has never been greater.
It’s hard to say what this means for the company in the short term. Gilead’s ability to adapt as the pandemic ensues is critical to the company’s long term health. Investors will have to see if Gilead succeeds in developing fresh new ways to use Trodelvy to save more lives.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.