How Shrewd of a Dealmaker Is Gilead Sciences? Just Look at Its Last 7 Acquisitions

Deal or no deal?

No, this isn't a reference to the once-popular TV game show. Instead, it's the question that investors are asking about Gilead Sciences (NASDAQ: GILD). The big biotech's executives have publicly stated that acquisitions are a priority for this year. But 2017 is now more than halfway over -- and no deal is in sight.

Would an acquisition really help Gilead that much anyway? Look to the past to see what the future could hold. Here's a look at the seven acquisitions made by Gilead Sciences over the last decade along with a grade for each deal.

2009: CV Therapeutics

In March 2009, Gilead announced plans to buy CV Therapeutics for $1.4 billion. CV Therapeutics had two approved products, angina drug Ranexa and Lexiscan, an injection used as a pharmacologic stress agent in radionuclide myocardial perfusion imaging in patients unable to undergo adequate exercise stress.

While Lexiscan didn't generate enough revenue for Gilead to list the drug's sales in its quarterly filings, Ranexa performed quite well. From 2009 through the first quarter of 2017, sales for Ranexa totaled more than $3.4 billion -- making the CV Therapeutics acquisition pay off quite nicely.

Grade: A

2010: CGI Pharmaceuticals

Gilead reported in June 2010 that it planned to buy privately held CGI Pharmaceuticals for up to $120 million. Although CGI didn't have any approved products, the biotech did claim a promising library of proprietary small molecule kinase inhibitors, with a lead pre-clinical compound targeting spleen tyrosine kinase (Syk).

So far, the CGI Pharmaceuticals acquisition hasn't resulted in an approved drug for Gilead Sciences. However, the company does now have multiple mid-stage clinical studies in progress for two Syk inhibitors, entospletinib and GS-9876. It's still too early to know if these experimental drugs will prove successful. However, advancing to phase 2 studies is something that most pre-clinical compounds don't accomplish.

Grade: C+ (with the potential to move higher)

2011: Arresto Biosciences

Gilead made news in December 2010 with its planned acquisition of Arresto Biosciences. The deal closed in early 2011. Gilead paid $225 million with the possibility of future milestone payments to scoop up Arresto's pipeline, which featured lead candidate AB0024, a humanized monoclonal antibody (mAb) targeting the human lysyl oxidase-like-2 (LOXL2) protein. The drug later became known as simtuzumab.

Simtuzumab seemed promising. Gilead evaluated the drug in several indications, including primary sclerosing cholangitis, nonalcoholic steatohepatitis (NASH), and idiopathic pulmonary fibrosis. Unfortunately, the company ended up halting development of the experimental drug after multiple disappointments.

Grade: D

2011: Calistoga Pharmaceuticals

In February 2011, Gilead announced that it was buying clinical-stage biotech Calistoga Pharmaceuticals for $375 million. The terms of the deal also included the potential for another $225 million in milestone payments. Calistoga's lead candidate was a first-in-class specific inhibitor of phosphoinositide-3 kinase (PI3K) known then as CAL-101. Gilead later changed the name of the drug to GS-1101, then to idelalisib, and ultimately to Zydelig.

Gilead won U.S. regulatory approval of Zydelig in 2014 for treating chronic lymphocytic leukemia (CLL) and lymphoma. Since then, the drug has generated total sales of $358 million through the first quarter of 2017. Gilead is also evaluating Zydelig in a late-stage study for treatment of relapsed refractory CLL. So far, Zydelig has proven to be a disappointment, with Gilead still yet to recover its initial investment made to buy Calistoga.

Grade: D

2012: Pharmasset

Not too long after competing the acquisitions of Arresto and Calistoga, Gilead made its biggest deal ever. In November 2011, Gilead announced plans to buy Pharmasset for $11 billion. The deal closed in early 2012. At the time, many observers questioned the wisdom of paying so much for Pharmasset's hepatitis C virus (HCV) pipeline.

As things turned out, Gilead's acquisition wasn't just a good one -- it was a great one. Pharmasset's lead candidate eventually made it to the market under the brand name Sovaldi. This drug was later combined with others and marketed as Harvoni and Epclusa. The three drugs have together generated a whopping $49.2 billion for Gilead through the first quarter of 2017.

Grade: A+ (and would be higher if there was a higher grade)

2013: YM Biosciences

In December 2012, Gilead once again stepped into the acquisition waters. The big biotech reported that it intended to buy YM Biosciences for $510 million, gaining YM's experimental JAK inhibitors in the process. YM's lead candidate, CYT387, later became known as momelotinib.

What happened with momelotinib? In November 2016, Gilead released disappointing results from two late-stage studies of the drug. The biotech later terminated development of momelotinib.

Grade: D 

2015: Epitherapeutics

Gilead's latest deal came in May 2015, when the company announced plans to buy privately held Epitherapeutics. This $65 million transaction allowed Gilead to pick up the small Danish drugmaker's library of first-in-class, selective small-molecule inhibitors of epigenetic regulation of gene transcription.

So far, the compounds gained from the Epitherapeutics acquisition remain in pre-clinical development. While the field of epigenetics is very promising, it's too soon to know if Gilead's bet will pay off.

Grade: To be determined

Overall grade

If we simply averaged the grades of the six acquisitions made by Gilead over the last decade excluding Epitherapeutics, the biotech would probably only receive an overall grade of C. That doesn't bode too well for Gilead's chances when it makes its next deal.

However, averaging isn't the best approach, since each of these deals involved significantly different levels of financial risk. What happens if we weight the grades for each acquisition based on the amounts that Gilead paid? The company gets a solid A in its dealmaking prowess. Gilead's transactions where it spent more than $1 billion paid off in the biggest ways.

One thing's for sure: Gilead is exercising a lot of caution in making its next move on the acquisition front. The company has more money to fund deals than it ever has before. If history is any guide, investors should be in store for good news whenever Gilead finally spends some of that money to buy a smaller biotech.

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Keith Speights owns shares of Gilead Sciences. The Motley Fool owns shares of and recommends Gilead Sciences. The Motley Fool has a disclosure policy.