Gilead to buy 49.9% stake in cancer drug developer for $275 million

FILE PHOTO: A Gilead Sciences, Inc. logo is seen outside the company headquarters in Foster City, California, U.S. May 1, 2018. REUTERS/Stephen Lam/File Photo

(Reuters) - Gilead Sciences Inc said on Tuesday it would buy a 49.9% stake in privately held Pionyr Immunotherapeutics Inc for $275 million, strengthening its cancer portfolio by securing access to two promising drugs.

The drugmaker, which is racing to secure enough supplies of its antiviral drug remdesivir for use in COVID-19, said it has also secured the right to acquire the rest of the drug developer for a $315 million option exercise fee.

Pionyr’s immuno-oncology experimental drugs, PY314 and PY159, have shown potential against solid tumors in animal studies and it plans to file applications with the U.S. Food and Drug Administration in the third quarter to begin human testing.

This is the third deal by Gilead in the span of four months aimed at expanding its oncology portfolio, Jefferies analyst Michael Yee said in a client note.

In March, the company announced a $4.9 billion deal for Forty Seven Inc, snapping up an experimental treatment that targets blood cancer.

This was followed by a 10-year pact last month with Arcus Biosciences Inc to co-develop and market cancer immunotherapies.

“This is the most rational way to create long-term value rather than one big acquisition - and sets up Gilead for lots of interesting data in 2021,” Yee said.

Pionyr’s shareholders are also eligible to receive up to an additional $1.47 billion in option exercise fees and future milestone payments.

Remdesivir is at the forefront in the fight against the virus after the drug helped shorten hospital recovery times in a clinical trial, but some analysts express skepticism about its potential to bring in profits.

Reporting by Manojna Maddipatla in Bengaluru; Editing by Sriraj Kalluvila