Longtime Kite Pharma investors are set for a big gain with Gilead Sciences’ $180-per-share buyout—and founder-CEO Arie Belldegrun will reap a fair share of that windfall.
About $610 million, in fact, according to the company’s April 2017 proxy statement and the latest math on the shares he owns in one way or another—multiplied, of course, by that $180-per-share sale price.
Belldegrun’s change-in-control payout amounts to $15.5 million, according to the proxy, with $1.8 million in severance pay and target bonus, plus health insurance worth about $49,000. That total also includes $13.62 million in newly vested shares or options, valued at last year’s share prices.
But far more significant—obviously—will be Belldegrun’s payoff from the shares he already owns. Through his consulting firm Bioeast, investment firm Bellco Capital, a partnership dubbed MDRB, a family trust and a profit-sharing plan he controls, Belldegrun beneficially owns 3.32 million Kite shares. That’s 5.9% of the company.
Those shares, handed over to Gilead in its $11.9 billion takeover, are worth $598 million, thanks to the $180-per-share price. Almost 120,000 of the reported shares are options Belldegrun had the right to buy within 60 days of April 17 of this year. And some 1.5 million of them he garnered in a signing bonus when he permanently took on the president and CEO job in addition to his then-current chairman's role.
Belldegrun isn’t the only one collecting a big payday with the Gilead buyout, either. David Bonderman, Kite’s lead independent director, owns 2.43 million shares, according to the proxy statement. Like Belldegrun, Bonderman held a chunk of options—about 67,000—to exercise within 60 days of April 17. In total, Bonderman’s stake is worth $425 million in the buyout.
Nor is Belldegrun the only biotech executive to collect big money from his holdings in a sale. For instance, Medivation CEO David Hung last year was up for $354 million when that company sold to Pfizer for $14 billion. Hung had accumulated 2.84 million stock options and 1.45 million shares over the years, plus performance shares and stock appreciation rights.
And in the realm of biopharma payouts, that in itself was a hefty take. Henri Termeer, who was CEO of Genzyme when Sanofi snapped up his company for $20 billion, bowed out with $158 million in payment for stock, options, performance units and severance benefits. The Kite chief's deal proceeds far outclass both of the others'.