Is Gilead Overpaying for Forty Seven?
Forty Seven shares skyrocketed on Monday after the company announced that it would be acquired by Gilead Sciences. But is Gildead paying too much?
Forty Seven Inc. (NASDAQ: FTSV) shares skyrocketed on Monday after the company announced that it would be acquired by Gilead Sciences Inc. (NASDAQ: GILD). Both the Gilead and Forty Seven boards of directors unanimously approved the transaction, and it is anticipated to close during the second quarter of 2020.
Under the terms of the deal, Gilead will acquire Forty Seven for $95.50 per share in cash, for a total value of $4.9 billion.
Compared to the 50-day and 200-day moving averages of $41.97 and $18.06, Gilead is paying premiums of 127.5% and 428.8%, respectively.
It’s worth noting that Forty Seven only came public over the summer of 2018, and shares traded as low as $5 this past fall.
Through the addition of Forty Seven’s investigational lead product candidate, magrolimab, the acquisition will strengthen Gilead’s immuno-oncology research and development portfolio. Magrolimab is a monoclonal antibody in clinical development for the treatment of several cancers for which new, transformative medicines are urgently needed, including myelodysplastic syndrome, acute myeloid leukemia and diffuse large B-cell lymphoma.
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Daniel O’Day, board chair and CEO of Gilead, commented:
This agreement builds on Gilead’s presence in immuno-oncology and adds significant potential to our clinical pipeline. Magrolimab complements our existing work in hematology, adding a non-cell therapy program that complements Kite’s pipeline of cell therapies for hematological cancers. With a profile that lends itself to combination therapies, magrolimab could potentially have transformative benefits for a range of tumor types. We are looking forward to working with the highly experienced team at Forty Seven to help patients with some of the most challenging forms of cancer.
Shares of Forty Seven closed Friday at $58.00 but up almost 62% at $93.75 early Monday. Gilead Sciences stock traded up 2% to $70.74 on last look, in a 52-week range of $60.89 to $78.88.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
