NorthWest Biotherapeutics Inc (NWBO)

[hyperopia]

Sometimes a partnership deal turns into a buyout, either during the partnership negotiations, or afterward when the acquiring company has a closer look during the partnership. I don’t know the percentages but it happens fairly frequently. I know that I’ve posted one of Mercks buyouts here that happened that way, and that’s what happened with the Gilead buyout of Immunomedics a few years ago that I just posted about:

A record-setting deal

In the beginning of 2019, at a popular industry conference where seeds for future deals are frequently planted, Dickinson met with representatives from a New Jersey biotech called Immunomedics.

Immunomedics had ushered a handful of experimental cancer drugs into clinical trials since its founding in the early ’80s. At the time of its meeting with Gilead, the biotech was waiting to hear whether its most advanced medicine, an engineered antibody for a hard-to-treat form of breast cancer, would receive approval from the Food and Drug Administration.

The two parties talked about Immunomedics’ work, about Gilead’s cancer ambitions, and agreed to keep in touch over the next year and a half.

Gilead wouldn’t be the only company interested in Immunomedics. After the FDA approved Immunomedics’ breast cancer drug — now sold as Trodelvy — that April, the biotech reached out to Gilead and almost a dozen other pharmaceutical firms looking for a partner to help market it. One of those other firms came back with a counter offer: an all-out acquisition.

Dickinson said the offer took Gilead by surprise, especially considering that Immunomedics was just weeks away from presenting more detailed data on Trodelvy. Gilead, having seen the data early because of the partnering talks, knew they were strong and would likely bump up the price on any potential takeover bid.

“We expected it to turn from partnering discussions to an M&A transaction,” he said, “but we didn’t think it was likely that someone would try to do that a week before the company’s key data was going to be publicly disclosed.”

If Gilead wanted Immunomedics, it had to move fast. Two days after the initial acquisition offer, the company proposed its own, much larger bid. After some negotiating, Immunomedics’ board of directors agreed to sell to Gilead for $88 a share, or $21 billion total.

The deal immediately stirred debate. Wall Street analysts acknowledged the high price, which was more than double Immunomedics’ market value from the prior week, was likely to put off some investors, especially since it had become apparent that Gilead overpaid for Kite back in 2017.

Trodelvy wasn’t the neatest fit for Gilead’s strategy, either, since it’s not by definition an immuno-oncology drug. On the other hand, analysts expect Trodelvy to become a billion-dollar drug based solely on its first approval. If it were cleared for use in more cancers, sales could skyrocket.

“This is exactly what we have been waiting for,” wrote the team at Piper Sandler, following the Immunomedics deal announcement.

Trodelvy also provides Gilead, which had mostly worked in blood cancers, a foundation in solid tumors. According to Dickinson, Gilead envisions the drug pairing well with immuno-oncology medicines or targeted therapies, like the so-called PARP inhibitor class of medicines that’s been used to treat prostate, breast and ovarian cancers.

“Sometimes you have to start investing in those smaller pipeline assets, where the science is great and where they match your overall strategy, and then you find the bigger pieces around which to build. Trodelvy is a perfect example,” he said.

https://www.sec.gov/Archives/edgar/data/722830/000110465920108121/tm2030753-2_sc14d9.htm