Gilead and CV Therapeutics: What the Pundits Are Saying

“Another deal believe it or not in the drug industry has just come down. This time Gilead Sciences is buying CV Therapeutics, a $1.4 billion deal. We’ve seen so many acquisitions including Genentech-Roche which we talked about happening in recent days. $1.4 billion for CV Therapeutics which works out to $20 a share in cash.” (Fox Business Network, 8:23AM)

“Gilead buying CV Therapeutics, a big week for healthcare related stocks. $100 to $150 billion in healthcare deals in the past few months. Outrageous!…We’re talking about news that Gilead Sciences is going to buy CV Therapeutics in cash for $20 a share, about $1.4 billion topping a recent bid for the company. CV is a small cardiovascular drug maker and shares are shooting up.” (Fox Business Network, 9:27AM)

“Take a look at another deal out of the pharma space. Seems like that’s all we’ve been talking about over the last few days, deals in the pharma space or the biotech space. Gilead is buying CV Therapeutics today, $20 a share, about a 20% premium. Just shows that dealmaking continues to go on in that sector.” (CNBC, 3:06PM)

CV TherapeuticsThe general response from business television is positive and somewhat surprised over the rapid pace of the pharma and biotech deal activity recently. We think that this is an interesting deal in particular because this is the second bid for CV Therapeutics (CVTX) in the last month. The first bid was by Astellas Pharma Inc, a Japanese drug company, which valued the company at about $16 per share. This morning, Gilead Sciences (GILD) outbid Astellas by 25% and the market has pushed the stock up a whopping 31% thus far.

Clearly the bidding war for CV Therapeutics suggests that the biopharmasuedical company is in high demand. At Ockham, we understand why there is such demand for CVTX and we have had an Undervalued valuation on CVTX since we initiated coverage back in April of 2008. They have experienced significant revenue growth and cash flow and earnings per share have been improving. At 5% more than the acquisition price, we think it is definitely time to consider cashing out in CVTX because we would not expect another bid to overtake this one.

For Gilead Sciences, it gives them entry into the cardiovascular drug sub-sector by acquiring this young company with a lot of potential. Gilead is diversifying its offerings to better compete with what is quickly becoming a very consolidated pharma marketplace.

What the Pundits Are Saying About Gilead and CV Therapeutics

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