With $12B Deal, Kite Pharma Continues To Soar

Written by Kevin Dowd, PitchBook

It’s been a heady year for shareholders in Kite Pharma (Nasdaq: KITE). Between the start of January and the end of last week, the price of the company’s stock rose more than 200%, shooting from below $46 to close trading on Friday at $139.10. That prompted plenty of skepticism among short sellers in the medical industry.

But instead of a plunge, Kite’s stock has experienced another leap up and to the right. Fellow public biotech Gilead Sciences has agreed to acquire Kite for $180 per share, valuing the company at $11.9 billion and representing a 29% premium to the company’s already-lofty share price. Combined with the earlier climb, the deal means Kite has added some $8 billion to its market value during 2017. The company’s primary drug, a treatment for lymphoma and other blood cancers, is currently seeking regulatory approval in the US and Europe.

In recent years, those geographies have played host to a significant uptick in corporate M&A in the biotech sector. Biotech deal flow in the US and Europe doubled between 2013 and 2015 before experiencing a minor downturn last year:

Gilead, meanwhile, is no stranger to 10-figure deals in the biopharmaceutical space. Nearly six years ago, the company agreed to buy Pharmasset, a maker of treatments for hepatitis C, for about $11 billion. Overall, the company has completed 10 corporate acquisitions in the past decade, per PitchBook data, including nine in the pharmaceuticals & biotech subsector.