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Gilead Sciences to acquire Immunomedics in $21B deal

Gilead Sciences is set to acquire Immunomedics in a $21 billion dollar deal, which is expected to close in the fourth quarter of 2020. Dr. Behzad Aghazadeh, Immunomedics Executive Chairman, joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss.

Video Transcript

ALEXIS CHRISTOFOROUS: We've got shares of Immunomedics more than doubling here in the premarket this morning after Gilead agreed to buy the company in a $21 billion deal.

Let's break it down now with the Executive Chairman of Immunomedics Dr. Behzad Aghazadeh. Doctor, thanks so much for being with us.

So I see what Gilead is getting in all this. They're going to be getting your coveted cancer-treatment drug called Trodelvy. But what is Immunomedics getting out of this deal with Gilead?

BEHZAD AGHAZADEH: Yes, good morning, and thank you. Thanks for having us.

Obviously we're partnering with one of the foremost global organizations in human therapeutics, groundbreaking medicines in HIV and hepatitis C, more recently entering the oncology space. And this, I think, is going to be a flagship product, the foundational medicine around which they can continue to build out their oncology presence, and we're very fortunate to be at the very forefront of that with a drug that across multiple tumor types has shown promising efficacy, approved in one indication and multiple indications hopefully to come thereafter.

Obviously we have a responsibility to patients globally, and this affords us the opportunity to bring this medicine to other parts of the world. We're currently only commercializing in the US, whereas Gilead's global presence can ensure that we reach patients across the world who are waiting patiently but unfortunately don't have a lot of time. So we could not be more excited about partnering with Gilead.

BRIAN SOZZI: Doctor, maybe perhaps you could alleviate any concerns by Gilead shareholders. What's the IP runway for Trodelvy

BEHZAD AGHAZADEH: So Trodelvy has IP through 2033. But beyond that, it's an antibody drug conjugate, which brings with it a tremendous amount of complexity. So it is very much our expectation-- I believe also Gilead's-- that the constructs will be very difficult to genericize, and if there will be generics, the erosion curve is quite different to other therapies, in particular small molecules that have immediate erosion. These chemical entities of these constructs as biologics are much more difficult to genericize, and there's really no clear path of how we would even see generics one day.

So I think despite the fact that the IP from a headline standpoint is 2033, I think there's a substantially longer runway with these agents.

ALEXIS CHRISTOFOROUS: Doctor, we see your stock up better than 100% here in the premarket. Gilead's coming under a little pressure, down about 1 and 1/2%. There are some on the Street who are saying that perhaps this $21 billion price for your company is a little rich. I think it's something like 108% premium to where Immunomedics closed on Friday. What can you tell Gilead investors right now who may be concerned that this price is-- that they're overpaying for your company?

BEHZAD AGHAZADEH: Yeah, certainly from a headline standpoint, the total value consideration of the deal does stand out relative to the other deals. I think what is not necessarily entirely clear or well understood at this point is the numerous types of indications, the potential to advance not just in those settings but also move up in lines of therapy, capture more patients, the potential for the long IP protection that this warrants, and the ability to make this foundational therapy around which a lot more work could be done and more developments could occur, in particular combination therapies with other agents that have shown promise in the cancer setting.

Over time, if those combinations bear fruit, you could see significantly larger adoption, longer time on these therapies. And so from a return standpoint, I think the shareholders of Gilead will, over time, come around and appreciate this was a very good deal for them as well.

BRIAN SOZZI: So, Doctor, the deal is supposed to close in the fourth quarter of this year. Can you give Gilead investors-- what are the key data points in early 2021 regarding Trodelvy?

BEHZAD AGHAZADEH: Actually, I wouldn't even ask them to wait that long. In fact, as early as this coming Saturday, the European Society of Medical Oncology, the ESMO conference, will take place where we will share what will I think be groundbreaking data very rarely seen across any indication but in particular in triple negative. This will be the first time the full data presentation will occur of the late-stage phase three study of [INAUDIBLE] in triple [INAUDIBLE]-- of our drug Trodelvy in triple negative breast cancer patients. And I think there will be a lot of takeaways from that, not only that this is a foundational therapy in triple-negative breast cancer but that it's certainly opened doors into other tumor types that's significantly enlarged the market opportunity. Beyond that, we'll also show data in urothelial cancer, which is a second indication we hope to be able to be in a position to file for later this year.

In 2021 and beyond, there will be other tumor types in metastatic breast cancer, with different subtypes of breast cancer, and non-small-cell lung cancer, and in combination therapies, all of which are looking quite promising. But the data presentation for that in 2021.

And then finally, European filing for registration is going to occur sometime in the first part of 2021. And so I believe with Gilead's stewardship, we'll be in a position to start commercializing across the European marketplace perhaps towards the end of '21 or early '22.

BRIAN SOZZI: And when do you expect full FDA approval?

BEHZAD AGHAZADEH: Well, the drug is already approved in the US under what is called subpart H or accelerated approval, and that is basis of early data that was presented to them. And we received the approval in late April and has been commercially available since the very early days of May.

We will file for full approval, which just adds additional data. But I think after this weekend when the data is disseminated to the medical community, the benefit of these patients that are alive by being on Trodelvy will become even more clear to them. But certainly we're excited to be able to file this data, and we haven't been clear about when that occurs or might have already occurred. But I would not think that the FDA will take very long to put that full data into the label and have the full approval out there for triple-negative breast cancer.

The other subtypes-- we have to submit for [INAUDIBLE] and metastatic breast, those would be events that would occur potentially either late this year or in the first half-- or in the first half of next year.

ALEXIS CHRISTOFOROUS: Doctor, I know that Immunomedics has been operating without a CEO for a few months now. You're the executive chairman of the company. What will your role be once this acquisition is completed? Do you know?

BEHZAD AGHAZADEH: I tend to believe-- I do know that. So yes. In fact, I have held this position for actually 18 months now. This has been a position that I took over as being the chairman, and when we separated with our prior CEO, I stepped in to ensure that we navigate the period ahead.

What I believe I can with certainty say is that there will be one role that will be a synergy as part of this deal, which is the elimination of the potential opening of a CEO. I have a separate job that I've been running in parallel. I'm a fund manager. And so I will be going back to that once this deal closes.