CymaBay's stock surged by almost 25% early Monday after Gilead Sciences announced its acquisition of the liver disease drugmaker for $4.3 billion. CymaBay focuses on treating a liver disease called primary biliary cholangitis (PBC), with its drug seladelpar showing promise in improving the itching associated with the disease. Gilead sees this acquisition as a strategic addition to its portfolio of liver disease treatments, which includes drugs for hepatitis B and C.
The news of Gilead's acquisition coincided with an announcement from CymaBay that the Food and Drug Administration (FDA) has accepted its application for approval of seladelpar. The FDA is expected to make a decision on the drug by August 14 after conducting a speedy review.
Analysts view the deal positively for Gilead, noting that it adds a quality liver asset to its portfolio, although at a high premium. The market opportunity for seladelpar is estimated to be around $650 million per year, with Gilead paying 6.6 times the optimal peak sales estimate.
In early trading, CymaBay's stock surged by 24.4% to $31.95, valuing the shares at $32.50 apiece as per the deal. Gilead's stock also rose slightly to $73.88.
If approved, seladelpar will be the second treatment available for PBC patients, alongside the generic drug ursodeoxycholic acid. Ocaliva, another treatment for PBC, can worsen itching and is typically added after a year of treatment with ursodeoxycholic acid. CymaBay's CEO described the itching associated with PBC as "menacing," highlighting the significant impact it has on patients' quality of life.
Analysts caution that achieving the estimated sales for seladelpar would require a significant portion of Ocaliva patients to switch to seladelpar or add it to their treatment regimen. It would also require new patients to start on seladelpar, which could be challenging considering Ocaliva will become generic within eight years and the presence of a competing drug, elafibranor, in the market.
For Gilead, seladelpar could be a strategic fit, allowing the company to leverage its existing sales force for hepatitis treatments. CEO Daniel O'Day indicated that the company can afford to be selective in its business development efforts, given the strength of its current portfolio and the absence of significant patent expirations until at least 2033.
CymaBay's stock has seen a significant increase in value, surging by nearly 261% last year and continuing to perform well this year. With a strong Relative Strength Rating of 98, CymaBay stock is among the top 2% of all stocks in terms of 12-month performance.
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