Gilead to buy Kite for $12 bn to acquire cancer therapy

Gilead Sciences Inc agreed to buy Kite Pharma Inc in a $11.9 billion deal on Monday, as it looks to fuel growth with an emerging class of cancer immunotherapies that are expected to generate billions.

Gilead will pay $180 per share in an all-cash deal, representing a 29.4 percent premium over Kite’s Friday close. Kite’s shares were trading up at $178.15 before the bell.

Gilead had been looking for an acquisition to diversify its portfolio beyond its leading position in infectious-disease treatments and provide a new revenue stream as sales of the company's hepatitis C drugs decline.

Santa Monica, California-based Kite is developing a CAR-T, or chimeric antigen receptor T-cell therapy, which harnesses the body’s own immune cells to recognize and attack malignant cells.

Axi-cel is likely to face swift, steep competition. Novartis AG, one of the leading cancer-drug makers, beat Kite to be the first company to ask the Food and Drug Administration to approve a bioengineered T-cell drug. Several other companies are developing the drugs too.

The deal positions Gilead as a leader in cell therapy, a cutting edge technology. "The acquisition of Kite establishes Gilead as a leader in cellular therapy and provides a foundation from which to drive continued innovation for people with advanced cancers,” said president and chief executive of the pharma firm John Milligan.

The all-cash deal is expected to close in the fourth quarter.