In a bid to capture market share for metabolic related disorders, Gilead Sciences, Inc. (NASDAQ:GILD) has decided to buy a subsidiary of Nimbus Therapeutics LLC, Nimbus Apollo Inc. The subsidiary is currently in the process of developing an experimental medicine to address the disorder, which leads to the fat buildup in the liver.
$400 deal
Gilead has agreed to pay as much as $400 million for acquiring Nimbus Apollo Inc. If the Nimbus Apollo’s drug development program fetches the desired testing results as well as approval and sales, then it will authorise the parent company, Nimbus Therapeutics to receive an additional payment of $800 million.
Gilead’s appealing drug portfolio has already led to the generation of billions of sales revenues for the company. Some of the key drugs in the company’s portfolio include hepatitis C based medicines, Sovaldi, and Harvoni.
The company had reported a cash balance of $26.2 billion as at the end of 2015, which led investors to believe that the company will utilise the cash towards the meaningful acquisition of effective drugs. Such beliefs turned out to be true as the new announcement indicates that the company is on track to build up a diversified portfolio to trim its dependence on hepatitis C drugs.
Urgent need to diversify portfolio
The company’s efforts also reflect the burgeoning pressure from the insurers, who are demanding Gilead to cut their hepatitis C drugs’ list prices. Currently, Sovaldi costs $84,000 while its combination with Harvoni could cost a patient $94,000. Meanwhile, the insurers are also pushing the company’s competitors to market their new hepatitis C drugs at a lower price as and when they launch, which could hamper Gilead’s market share in the U.S.
In such a situation, Nimbus’ experimental drug, which claims to offer treatment for fatty liver as well as liver cancer is an attractive opportunity for Gilead. The drug is named NDI-010976 and has already secured the Food and Drug Administration’s fast-track status in February. The stock of Gilead closed the previous session, 0.13% higher at $94.24.
