Is Gilead Overpaying for Forty Seven?

By Chris Lange Published Mar 2, 9:50AM EST

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Is Gilead Overpaying for Forty Seven? — © xrrr / iStock

Forty Seven Inc. (NASDAQ: FTSV) shares skyrocketed on Monday after the company announced that it would be acquired by Gilead Sciences Inc. (NASDAQ: GILD). Both the Gilead and Forty Seven boards of directors unanimously approved the transaction, and it is anticipated to close during the second quarter of 2020.

Under the terms of the deal, Gilead will acquire Forty Seven for $95.50 per share in cash, for a total value of $4.9 billion.

Compared to the 50-day and 200-day moving averages of $41.97 and $18.06, Gilead is paying premiums of 127.5% and 428.8%, respectively.

It’s worth noting that Forty Seven only came public over the summer of 2018, and shares traded as low as $5 this past fall.

Through the addition of Forty Seven’s investigational lead product candidate, magrolimab, the acquisition will strengthen Gilead’s immuno-oncology research and development portfolio. Magrolimab is a monoclonal antibody in clinical development for the treatment of several cancers for which new, transformative medicines are urgently needed, including myelodysplastic syndrome, acute myeloid leukemia and diffuse large B-cell lymphoma.

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Daniel O’Day, board chair and CEO of Gilead, commented:

This agreement builds on Gilead’s presence in immuno-oncology and adds significant potential to our clinical pipeline. Magrolimab complements our existing work in hematology, adding a non-cell therapy program that complements Kite’s pipeline of cell therapies for hematological cancers. With a profile that lends itself to combination therapies, magrolimab could potentially have transformative benefits for a range of tumor types. We are looking forward to working with the highly experienced team at Forty Seven to help patients with some of the most challenging forms of cancer.

Shares of Forty Seven closed Friday at $58.00 but up almost 62% at $93.75 early Monday. Gilead Sciences stock traded up 2% to $70.74 on last look, in a 52-week range of $60.89 to $78.88.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.