Gilead Sciences, under intense investor pressure to do a significant M&A deal, may have found a target it likes. It is said to be evaluating United Therapeutics, although it finds itself in competition with GlaxoSmithKline and perhaps others.
The Evening Standard, citing unnamed sources, said that Gilead Sciences is considered the most likely candidate to win a bid for United Therapeutics. But the newspaper also said that GSK has Citi and Lazard helping it assess the United, a company founded in 1996 on a pulmonary arterial hypertension (PAH) drug that had been discarded by GSK.
Sources indicated that United Therapeutics, with a market cap of about $5.5 billion, might fetch $200 a share, a price that would put a deal close to $9 billion. The drugmaker, a specialist in PAH, had revenue of $1.6 billion in 2016. It said other drugmakers, like Novartis, may also be checking it out, so that any deal might turn into an auction.
Shares of United were up more than 11% in early trading as word of the potential interest circulated. None of the companies commented on the report.
Gilead’s John Milligan, since taking the helm of Gilead last year, has been under intense pressure to take the company’s cash hoard and do a deal to offset declining sales of its hep C portfolio. He has conceded that a sizable acquisition is needed in order to grow in the near term but has mentioned oncology as an area that interests him.
GSK CEO Emma Walmsley, during an earnings presentation last week, said the U.K. drugmaker is tucking some capital away in case an M&A opportunity presented itself and that it was interested in bolt-ons. Both drugmakers have PAH meds.
United Therapeutics' share price was up today but it took an 8% hit last week when the company disclosed in a securities filing that it had set aside $210 million toward a potential settlement with the Justice Department over its financial assistance to patient assistance groups.
It acknowledged that like many drugmakers, it has received a subpoena from the DOJ, which is investigating whether support to patient groups might be considered kickbacks to get them to direct patients to buy a company's drugs. United said it believed it could defend itself against any charges but engaged in settlement negotiations to try to resolve the matter.
According to the Wall Street Journal, United last week said it had cut its grants to nonprofit patient-assistance programs by $32 million in the first half of this year, but didn’t disclose why.
Most drugmakers offer copay assistance programs, and many of them have received subpoenas from the DOJ, including Big Pharma players like Pfizer and Johnson & Johnson, as well as big biotechs like Celgene and Biogen. The federal investigation into whether drugmakers are pushing the limits of legality by exercising some influence over how the programs work, first came to light last year when ethically challenged Valeant Pharmaceutical’s disclosed a subpoena.