Stock slide makes biopharma deals more enticing for Gilead (and everyone else)

Gilead President John Milligan

Analysts and investors may have been ready for Gilead Sciences ($GILD) to make an M&A move before now. But with stocks on a slide, they might be glad Gilead hasn't yet.

As the Wall Street Journal points out, Gilead's shares haven't been immune to the overall market decline. As of yesterday, the company's stock was off about 9% over the past week or so. But the company is sitting on almost $15 billion in liquidity--with more cash coming in by the day, thanks to its hep C meds Sovaldi and Harvoni--and biotech's stock losses mean deals are lots cheaper now than they were.

And that, in turn, could put a bigger target on the table. Last month, Gilead President John Milligan said the company is eyeing all sorts of deals, from the small, bite-size transaction all the way up to a so-called "transformative" deal--a.k.a., a multibillion-dollar buy that could vault Gilead even higher on the list of top 10 global drugmakers.

That doesn't narrow things down much, and Gilead isn't likely to hint in more detail just because the market's down. But with analysts clamoring for dealmaking info--Evercore ISI's Mark Schoenebaum went so far as to chant, "who're you going to buy" during the Q2 earnings call--the speculation is rampant.

Gilead should buy Vertex ($VRTX) and its new cystic fibrosis cocktail, or Alexion Pharmaceuticals ($ALXN) and its orphan drug blockbuster Soliris, or Incyte ($INCY) and its cancer med Jakafi, market-watchers say. Or BioMarin ($BMRN), with its newly narrowed focus on rare diseases, now that it has offloaded a cancer med to Medivation ($MDVN). Or Medivation itself; Gilead has cancer ambitions, after all.

Of course, there's plenty of competition for deals out there, and shaved prices appeal to every pharma shopper. Allergan ($AGN) wants to keep growing by acquisition, Pfizer ($PFE) wants to add to the innovative side of its business, and so on and so on. Gilead may find its own deal targets suddenly more attractive, but its rivals likely will, too.

- see the WSJ piece (sub. req.)

Special Reports: The top 15 pharma companies by 2014 revenue - Gilead Sciences | Pharma's top 10 M&A deals of 2014

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