Immunomedics shares jump as Gilead agrees to a $21 billion buy deal

Shares of cancer drugmaker Immunomedics doubled after Gilead Sciences announced on Sunday that it will acquire the company for $21 billion, or $88 per share in cash.

In pre-market trading on Monday, Immunomedics shares jumped more than 100%. While the company holds a market value of nearly $10 billion.

Funds for the deal will be delivered in two ways: a payment of $15 billion in cash and $6 billion in newly issued debt. According to a statement Gilead released, the deal is expected to close by the fourth quarter of 2020.

“This acquisition represents significant progress in Gilead’s work to build a strong and diverse oncology portfolio,” said Daniel O’Day Gilead’s Chief Executive.

This acquisition deal will avail Gilead Sciences the opportunity to extend its dominance in the biotech and pharmaceutical industry, with increased availability of cancer treatments. The deal will also give Gilead easy access to the Food and Drug Administration-approved treatment, Trodelvy for the treatment of metastatic triple-negative breast cancer.

“Trodelvy is an approved transformational medicine for a form of cancer that is particularly challenging to treat,” O’Day said. Adding that, Gilead is committed to exploring the drug’s ability to “treat other types of cancer, both as a monotherapy and in combination with other treatments.”

Investors and Gilead’s management sees this deal as a profitable one as it comes after Gilead’s hepatitis C treatment demand fell in recent times with its overall sales falling due to the impact of the Covid-19 on the demand for some drugs. In the second quarter, Gilead’s total sales fell 10% to $5.1 billion.

The World Health Organization said cancer is the second-largest cause of death worldwide, killing nearly tens of millions of people every year. As a result of that, many biotech companies give much attention to developing cancer treatments.

The move to buy Immunomedics will help boost Gilead’s dominance of the market as it participates in the race to also develop an effective Covid-19 treatment. About four months ago, the Food and Drug Administration permitted Gilead’s remdesivir, an antiviral drug to be used under emergency authorization. This allowed hospitals and authorized healthcare centers to use the drugs on Covid-19 patients while the drug awaited formal approval.

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