AstraZeneca Approaches Gilead About Potential Merger

Gilead has attracted investor interest as its antiviral drug for Covid-19, remdesivir, worked its way through clinical trials in recent months. The stock is still more than a third lower than its 2015 highs. The Foster City, California-based company has seen a steady decline in?sales?in its hepatitis C franchise and is trying to reinvigorate its drug-development pipeline.
Remdesivir, which has an emergency use authorization from the U.S. Food and Drug Administration, has been shown in some early studies to shorten hospital stays for people with Covid-19. SVB Leerink recently?forecast?that sales of the drug may reach $7.7 billion in 2022.
Gilead has been dispensing early rounds of the drug for free, leading some investors to?question?how the company plans to make money from it in the future. Chief Executive Officer Daniel O?Day has said the company may?spend?$1 billion on the treatment this year alone.
AstraZeneca is helping to manufacture a Covid vaccine developed at the University of Oxford. The U.S. has pledged as much as $1.2 billion to support the efforts as part of Operation Warp Speed, a push to secure vaccines for America. The shot is expected to?enter?final-stage clinical trials in June.
Gilead was founded in 1987 by Michael Riordan, a doctor with a Harvard MBA who aimed to discover treatments for viral infections after a bout with dengue fever acquired in southeast Asia. The company?s best-known successes include Tamiflu, the influenza treatment it helped develop.
The company also makes Truvada, a medicine that can help prevent HIV, as well as drugs for liver disease and inflammation. Gilead employs about 12,000 people, according to its?website.
AstraZeneca is no stranger to large-scale, politically sensitive M&A. In 2014 it?fended off?a $117 billion approach from?Pfizer Inc., a deal that attracted attention from U.S. lawmakers as it would have allowed New York-based Pfizer to lower its tax bill by redomiciling in the U.K.