NEW YORK (AP) -- Biotechnology company Gilead Sciences Inc. said Thursday it will buy CV Therapeutics for about $1.4 billion as a wave of consolidation in the drug industry continues.
Gilead, best known for its HIV drugs, said it will pay $20 per share in cash for Palo Alto, Calif.-based CV Therapeutics. Last year Astellas Pharma of Japan tried to buy CV for $1 billion, or $16 per share, which was rejected. CV's board has approved the sale to Gilead and recommends shareholders tender their stock in support.
Citi Investment Research analyst Yaron Werber backed the deal in a note to clients.
"The deal makes perfect strategic sense but the price is very steep," he said.
CV Therapeutics reported $154.5 million in revenue in 2008. It gets most of its revenue from Ranexa, a drug for chronic angina. Werber said Ranexa will probably never be a blockbuster, but Gilead will be able to use CV's sales force to sell a new blood pressure drug candidate called darusentan, which is in late stage testing.
Data from a trial of darusentan is due in May, Werber said, and he predicted marketing approval in early 2011.
Gilead reported $5.34 billion in revenue, primarily from sales of the HIV treatments Atripla, Truvada, Emtriva and Viread. The company said the purchase will strengthen its portfolio of cardiovascular drugs, which already includes the blood-pressure drugs Letairis and Flolan.
Foster City, Calif.-based Gilead says the purchase will reduce its profits this year and increase them starting in 2011.
CV Therapeutics shares jumped past the sale price in morning trading, indicating investors may expect a greater bid. The stock rose $4.57, or 28.6 percent, to $20.57 and peaked at $20.68, its highest price in nearly three years.
Gilead shares fell 60 cents to $43.44.