Gilead and Kite: "A Game-Changer"

Focus: HEALTHCARE

David Toung Image David Toung Senior Analyst: Medical Devices & Healthcare Services, Argus Research Corporation

We are raising our rating on Gilead Sciences (GILD) to buy from hold and setting a price target of $100. In our view, the company’s plan to acquire Kite Pharma (KITE) is a game-changer, explains David Toung, editor of Argus Research.


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After accumulating substantial cash without pursuing acquisitions, Gilead is making a bold step through its purchase of Kite Pharma, which focuses on reprogramming patients’ own cells to attack cancer.

The recent acquisition announcement changes our view of Gilead and its long-term growth prospects, and underscores the company’s ability to expand outside its core area of antiviral drugs.


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With Kite, Gilead will gain a leading-edge cell therapy technology and a new oncology drug that appears on track for approval by late November.

In addition, it will acquire a platform for developing new oncology treatments for blood cancers and solid tumors. The Kite platform will also provide a base for collaborative or in licensing agreements, and help to fill an important gap as Gilead works to offset declining revenue from its hep C drugs.

Gilead will pay $11.9 billion in cash for Kite.

 
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