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Kite pharma11/29/2022 ![]() ![]() Gilead chose to finance the Kite deal through a combination of cash, bank debt, and senior unsecured notes. Perhaps the best news about the Kite Pharma acquisition for investors is that Gilead remains in excellent position to make more deals. By making this one acquisition, Gilead will instantly become one of the leaders in the exciting new area of using cell therapy to treat cancer. While Kite won't transform the big biotech's financial prospects in the near term, the deal definitely deserves to be called transformative because of the effect it will have on Gilead's position in the oncology arena. However, Gilead had hinted at making a "transformative" acquisition. Even assuming Kite's lead candidate axi-cel wins FDA approval in November, there will be a gradual ramp-up in sales. That won't happen with Kite, since the smaller biotech doesn't have a product on the market yet. Like many, I thought that Gilead would most likely make an acquisition that would quickly boost its top and bottom lines. As is the case with most rumors, however, the story soon fizzled out. This trend had already started in June, with rumors that French drugmaker Sanofi could be making a play for buying Gilead. ![]() My view is that the news of the Kite buyout made some investors wake up to the reality of what a bargain Gilead Sciences stock had become. That statement, of course, turned out to be a head fake to keep everyone guessing. It was only a couple of weeks before the announcement of the acquisition that Gilead CEO John Milligan stated that it might not make any deals in oncology. For some investors, the mere fact that Gilead had actually done anything was encouraging. There are several reasons why the market responded so positively to Gilead's Kite deal. For investors, Gilead's decision to buy Kite has already paid off. That's a $12 billion increase - the amount Gilead will pay for Kite. The Kite acquisition increased the market valuation of Gilead Sciences from $96 billion to $108 billion. In the subsequent weeks, the company's market cap has hovered around $108 billion or so. By the end of the week, Gilead's market cap had jumped to over $109 billion. The big biotech announced the Kite deal prior to the market open on Monday, Aug. 25, Gilead's market cap stood at roughly $96 billion. The Oceanside site is just the newest addition to Kite’s group of manufacturing facilities - including others in California, the Netherlands, and in Maryland.At the market close on Friday, Aug. On top of that, the pharma is investigating potential options to automate quality control testing, as every batch Kite makes is for only one patient. The operations chief noted that this was just on the manufacturing side. What we’re working on is really developing an automation platform that will take a lot of the manual steps away and automate them and also close the manufacturing process, so that we don’t have to operate aseptically, which is a huge benefit for our staff - drives a lot of efficiency. And it’s a very manual process and staff are bound quite a bit in aseptic gowning. I think right now, if you went into any lab in any university, you’re gonna see staff working under a biosafety cabinet, you know, making products, etc. McDonald added that the Gilead subsidiary is looking at automating part of the manufacturing process so that Kite can become more efficient. The vectors are the ingredient that encode the chimeric antigen receptor into a patient’s T cells. Viral vectors, according to McDonald, are a key ingredient needed for Kite to make the CAR-T cell therapies that the biotech has gotten approved to make for patients, such as Yescarta and Tecartus. The building also touts two manufacturing suites: One is fully dedicated on retroviral vectors in current commercial products, and the other is set aside for future expansion for pipeline products and potentially different types of vectors. Kite has employed 100 workers focused on viral vectors in the facility, and since the building is located on Gilead’s campus, the parent pharma will be providing logistical support, such as cafeteria staff and building security. ![]()
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