Gilead Sciences will pay $11.9 billion in cash to buy Kite Pharma and plant a stake in an emerging area of cancer treatments that train a patient's immune cells to attack tumours.
Kite's portfolio of potential treatments includes one for the blood cancer lymphoma that could receive US regulatory approval later this year.
The Santa Monica, California-based company specialises in developing treatments that are custom-made to target a patient's cancer. Called CAR-T, this type of therapy involves removing immune cells from a patients' blood, reprogramming them to create an army of cells that can zero in on and destroy cancer cells and injecting them back into the patient.
Gilead has developed top-selling treatments for HIV and the liver-destroying hepatitis C virus, but leaders of the biotechnology company told analysts Monday that its push into oncology has been largely nascent so far. They said that the Kite deal helps establish Gilead as a leader in so-called cellular therapy and provides an opportunity to diversify revenue.
"(Kite's) work has opened a clear path towards the potential cure for lymphoma patients who've run out of options and are desperately in need of treatment,'' Gilead president CEO John Milligan said.
The companies expect approval for Kite's potential treatment of refractory aggressive non-Hodgkin lymphoma in the fourth quarter in the United States and next year in Europe.
Others developing CAR-T therapies include Novartis Corp. Earlier this summer, a Food and Drug Administration advisory panel voted 10-0 in favour of the leukemia treatment developed by the University of Pennsylvania and Novartis. That pushed the treatment for a common childhood blood cancer closer to becoming the first gene therapy available in the United States.
Foster City, California-based Gilead Sciences Inc said that it will pay $180 for each share of Kite Pharma Inc, marking a 29% premium to the company's closing price on Friday. The deal has been approved by both companies' boards and is expected to close in the fourth quarter.
Shares of Kite jumped 29% to $179.50 in early morning trading on Monday, after the deal was announced. Gilead's stock rose 66 cents to $74.45.