A huge exit on Israeli biomed: Gilead buys Kite Pharma for $11.9 billion in Cash

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Gilead Sciences agreed on Monday to buy Kite Pharma for $11.9 billion in an all-cash deal. This acquisition is one of the biggest ever of a company whose products have not yet approved for marketing.

Gilead will pay $180 per share, representing a 29.4 percent premium over Kite’s Friday close. Kite’s shares were trading up at $178.15 before the bell. Kate is traded on the Nasdaq at a market value of nearly $ 8 billion after a jump of 210% since the beginning of the year.

Kite is developing a CAR-T, or chimeric antigen receptor T-cell therapy, which harnesses the body’s immune cells to recognize and attack malignant cells.

Kite Pharma was founded in Santa Monica, California by Israeli-American Professor Arie Belldegrun, with a significant contribution to the technology on which the product is based, was developed by Professor Zelig Eshhar of the Weizmann Institute of Science.

Belldegrun has two exits to his credit. His first exit was in 2007, when the startup Agensys, which was one of its founders. The company was involved in genetic cancer mapping and sold to Japanese company  Astellas Pharma for $ 537 million. Two years later, a second exit came, with Belldegrun selling Cougar Biotechnology, which also dealt with cancer, to Johnson & Johnson for $ 970 million. 45 million of them were pocketed as one of the first investors in the company. Cougar’s leading product delayed production of testosterone to prevent the growth of prostate cancer tumors. He is also a former director of Teva Pharmaceutical Industries Ltd.

Kite Pharma is waiting for FDA approval of its first product on a very abbreviated track for innovative cancer products, following a successful trial on 100 patients. Kite’s product initially designed for treatment of blood cancer, but it is now hoped that its use can later be expanded to treatment of other types of cancer.

“The final idea is that our treatment will revolutionize all forms of cancer treatment,” Belldegrun said in an interview with Calcalist in January 2015 shortly after the IPO. “Today, chemotherapy helps 10% of patients and causes side effects to 100% of patients. It will not work that way anymore. The treatment will be personal against cancer cells in the body rather than against normal cells. There is no reason to cause hair loss because there is no hair growth,” he said.

Kite’s largest shareholders are US funds – Capital Group with almost 20% of the shares, Blackrock with 7% and JP Morgan with 4%. The main Israeli beneficiary are Pontifax fund, Menorah with just over 2%, and Migdal.

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