Gilead Sciences (GILD) is nearing a deal to buy biotech Immunomedics Inc for more than $20 billion, says the Wall Street Journal, which cites people familiar with the matter.
Immunomedics (IMMU) currently has a market value of just $9.77B, which means that GILD would be paying a significant premium in order to obtain IMMU’s key breast-cancer drug, Trodelvy. Shares in IMMU have already doubled year-to-date, with a 37% leap over the last three months.
In August, Immunomedics reported that Trodelvy generated $20.1M in its first two months on the market. Furthermore, market research conducted by the company showed that >80% of oncologists who treat metastatic triple-negative breast cancer (mTNBC) intend to prescribe Trodelvy in the third-line setting.
“We continue to expect robust uptake of Trodelvy in thirdline mTNBC; we are encouraged by the initial sales result” commented HC Wainwright analyst Robert Burns back in August. He has a buy rating on the stock and $56 price target (32% upside potential).
He noted that, for the initial launch, Immunomedics planned to focus on the top 150 breast cancer accounts in the U.S., and during the first two months of the Trodelvy rollout managed to penetrate more than 80% of those accounts.
“Furthermore, community hospitals and clinics have represented nearly 70% of the prescribing institutions” the analyst added. Indeed, IMMU scores a bullish Strong Buy Street consensus, with an average analyst price target of $52.50 (24% upside potential).
Meanwhile analysts have a more cautious Moderate Buy consensus on Gilead, with an average analyst price target of $79. With shares flat year-to-date, this indicates 20% upside lies ahead.
Oppenheimer’s Hartaj Singh believes GILD looks underappreciated right now. He tells investors: “with a dividend yield of ~4%, a core franchise in HIV growing in the high single digits, and HCV potentially stabilizing, GILD is ideally positioned.”
Singh has just boosted his price target to a Street-high $105 from $90 previously, explaining: “Nearterm pipeline projects remdesivir, filgotinib and magrolimab now provide us enough visibility to integrate into our model and drive GILD’s 3-5 year sales/earnings CAGR to ~9-10%; among the best in its peer group.” (See Gilead stock analysis on TipRanks)
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