- Gilead said that on Sunday it agreed to acquire cancer-making company Immunomedics for $ 21 billion.
- Following this news, Immunomedic shares rose by 106% on Monday.
- Immunomedics sells the drug Trödelvi, used to treat various forms of breast cancer, and is evaluated for several other possible cancer indications.
- Trodelvi was approved by the FDA in April and recorded $ 20 million in sales in its first two months on the market.
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Gilead’s proposed $ 21 billion acquisition of Immunomedics boosted shares of the cancer-drug company by 106% on Monday.
Immunomedics developed Trodelvi, an antibody-drug conjugate that is used to treat triple-negative breast cancer.
Trodelvi received FDA approval in April and recorded $ 20 million in sales in its first two months on the market. The drug is expected to generate blockbuster sales over the lifetime and is being evaluated as a treatment for many other cancer and solid tumor indications.
Gilead said Gilead expects to increase its revenue growth immediately after the deal, and that it is neutral to have adjusted earnings per share in 2023, as well as being “fairly loyalties” thereafter.
Gilead will take over $ 15 billion in cash through the acquisition, as well as $ 6 billion in newly issued debt.
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Over the years, Gilead has received enormous pressure from investors to work out its massive cash pile. At the end of 2018, Gilead had $ 30 billion in cash and short-term equivalents, according to data from YCharts.com.
Gilead’s cash pile is projected to drop to $ 4 billion, given the company’s most recent 10-Q filing that it is $ 18.91 billion in cash and intends to use $ 15 billion in cash for the immunomedics deal.
Gilead Investors has approved the deal. Gilead shares have gained 4% in Monday trading.
Gilead said it expects to maintain an investment grade credit rating following the transaction, and that the deal will not change its commitment to maintain and grow its dividend over time.
The $ 21 billion deal was approved by the boards of both companies and is expected to close in the fourth quarter of 2020.
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