LONDON: Shares of Gilead Sciences rose 3.2 per cent on Monday, reversing their premarket losses as investors shrugged off concerns over the steep premium the US drugmaker was willing to pay for Immunomedics Inc .
Gilead on Sunday agreed to buy the biopharmaceutical company for US$21 billion and acquire all the outstanding shares of Immunomedics for US$88 per share, at a premium of about 108 per cent over Friday's closing price of US$42.25.
The deal gives Gilead access to Immunomedics' cancer treatment drug, Trodelvy, which was granted an accelerated approval in April by the US Food and Drug administration for an aggressive and tough-to-treat type of breast cancer.
Brokerage Jefferies said investors may take some time to digest the deal, but it believed the deal offered a path for Gilead to quickly move into the solid tumors market.
Brokerage Oppenheimer views the purchase price as "reasonable", and said the cancer drug "slots neatly" in Gilead's oncology strategy.
Earlier in the day, at least two brokerages raised concerns about the deal price.
Baird said Trodelvy should give Gilead a "nice addition" to cement its foothold in the cancer treatment sphere, but that it was "less than thrilled" about the price.
SVB Leerink expected the main push back from investors to be about the deal price, not the product or the commercial opportunity.
"Gilead's purchase price is at a 300 per cent premium to where Immunomedics traded at the start of the year, and more than 100 per cent higher than where the stock had recently traded," the brokerage said.
Gilead's shares rose 3.3 per cent to US$67 in morning trading, after falling as much as 2 per cent before the opening bell on Monday.