Gilead Sciences to Buy YM BioSciences for $510 Million

Gilead Sciences Inc. (GILD), the world’s biggest maker of AIDS drugs, agreed to buy YM BioSciences Inc. (YMI) for $510 million to obtain the Canadian company’s research into treatments for a bone-marrow disorder.

YM BioSciences investors will receive $2.95 a share, Gilead, based in Foster City, California, said in a statement today. The all-cash deal carries an 81 percent premium over yesterday’s closing price for U.S. shares of YM BioSciences.

The Canadian company’s lead drug candidate, CYT387, combats myelofibrosis, a bone-marrow disease that can lead to anemia and an enlarged spleen, Gilead said. The drug is a so-called JAK inhibitor, a class of medicines pharmaceutical companies are testing for new treatments against cancer and autoimmune diseases. CYT387 is expected to enter the third phase of testing usually needed for U.S. approval in the second half of 2013, the companies said.

“We continue to believe their asset CYT387 for myelofibrosis had a strong efficacy and safety profile, and was highly underappreciated,” Brian Abrahams, an analyst with Wells Fargo Securities, wrote in a note. The acquisition provides Gilead “with a promising asset at a very reasonable price.”

First Quarter

The deal is expected to be completed in the first quarter, the companies said. YM BioSciences, based in Mississauga, Ontario, had C$125.5 million ($127.5 million) in cash and cash equivalents as of Sept. 30, according to the statement.

The acquisition “represents an opportunity to add a complementary clinical program” to treat blood cancers “to our growing oncology portfolio,” Norbert W. Bischofberger, Gilead’s chief scientific officer, said in the statement.

Gilead fell less than 1 percent to $76.23 at the close of trading in New York. YM BioSciences jumped 77 percent to $2.88, just below Gilead’s offer.

The acquisition “represents an opportunity to add a complementary clinical program” to treat blood cancers “to our growing oncology portfolio,” Norbert W. Bischofberger, Gilead’s chief scientific officer, said in the statement.

Holders of YM BioSciences warrants and stock options will receive the difference between $2.95 and the exercise prices, the companies said.

YM BioSciences received legal advice from Gowling Lafleur Henderson LLP, Heenan Blaikie LLP and Dorsey & Whitney LLP. Gilead was advised by Wilson Sonsini Goodrich & Rosati and Blake Cassels and Graydon LLP.

To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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