Gilead Pays Heavy Premium To Acquire Myogen

Excerpt from our One-Page WSJ Summary:

Gilead Agrees To Buy Myogen For $2.5 Billion

Summary: Biopharmaceuticals company Gilead Sciences Inc. (GILD) agreed to acquire Myogen Inc. (MYOG) for about $2.5 billion, in an attempt to gain ownership of Myogen's main drug candidate, Ambrisentan, a treatment for pulmonary arterial hypertension that is in late-stage clinical trials. The $52.50-a-share offer represents a 50% premium over Myogen's share price of $35.08 on Friday. Share prices shot up 47%, or $16.36, to $51.44 in trading yesterday. At the same time, Gilead shares were off $4.49, or 6.5%, at $64.28. While the Pulmonary hypertension pharma market generated just over half a billion dollars in sales in 2004, it is expected to be worth upwards of $2 billion by 2014, with Ambrisentan expected to be the top revenue generator of the group. Myogen expects to file a new-drug application for Ambrisentan with the Food and Drug Administration as early as the fourth quarter, Gilead said. Asked why they paid a 50% premium for Myogen shares, Gilead Chief Financial Officer John Milligan said: "We felt that the premium was a fair value for what we were doing here, and that this was in fact a product that we could build a franchise around."
Related links: Full WSJ article • Gilead Sciences, Inc. Q2 2006 Earnings Conference Call Transcript • Jim Cramer's Take on GILD • SF Chronicle: Gilead's purchase expands its scope • How Myogen Grew Its Market Cap More Than 7X Last Year
Potentially impacted stocks and ETFs: GlaxoSmithKline (GSK)

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