Gilead Sciences Captures the Attention of Financial Advisors with Potential Game-Changing Deal
The US stock market for the week ending September 2nd finished well in the green, boosted by the stocks of several companies and positive private sector jobs data released on Wednesday. Private payrolls in August increased by 237,000, according to ADP, which was significantly higher than the 185,000-figure expected by analysts surveyed by Reuters.
In this way, the S&P 500 advanced by nearly 1.40%, also helped by the growth registered by Apple Inc. (NASDAQ:AAPL)’s shares on the back of the announcement of the company’s September 12 event, where the tech giant is expected to present a new line of devices, including a new iPhone and a new Apple Watch. Netflix, Inc. (NASDAQ:NFLX) is another stock that registered gains on several consecutive gains, helped by Bernstein analysts’ note to clients that the removal of Disney’s content from its platform wouldn’t affect Netflix’s stock performance. Dow Jones also added 0.80% between August 28 and September 1, following a drop on Monday as declining insurance stocks dragged the Index lower. Dow Jones would have appreciated more if it didn’t slump on Friday, probably hindered by the non-farm payrolls data. According to the US Bureau of Labor Statistics, the US economy created 156,000 jobs in August, falling short of the analysts’ consensus estimate of 180,000. At the same time, the unemployment rate inched up to 4.4%, missing the expected figure of 4.3%, the same as the previous month.
The stock market did not appear to be significantly affected by the Hurricane Harvey that ravaged through Houston and parts of Texas the previous weekend. Some insurance stocks fell on Monday, but refinery stocks advanced on the back of a jump registered by gasoline futures. RBOB gasoline futures for September delivery appreciated by nearly 7% on Monday, following reports of refinery shutdowns in the greater Houston area. Hurricane Harvey could be the most expensive natural disaster in the US history, with AccuWeather, a weather forecasting services company, estimating its cost at $160 billion, which is significantly higher to the Hurricane Katrina in 2005, which cost $79.7 billion, according to Business Insider. A more conservative estimate, puts Harvey’s cost at $75 billion, according to disaster analyst Chuck Watson, cited by Bloomberg. However, the consensus among analysts is that, while Harvey is a major disaster that will have long-lasting consequences, it won’t affect the US economy.
Meanwhile, financial advisors kept their eyes on large-cap companies, according to TrackStar, the official newsletter of Investing Channel’s Intuition, compiled its weekly list of tickers that were the most searched by financial advisors in the week between August 27 and September 2. Aside from the aforementioned Apple Inc. (NASDAQ:AAPL) and Netflix, Inc. (NASDAQ:NFLX), AT&T, Inc. (NASDAQ:T), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT) also ranked at the top of the list on the back of various developments.
Another company that ranked in the top five most searched tickers is Gilead Sciences, Inc. (NASDAQ:GILD). In the last five weeks, Gilead had previously made the list of the top 20 most searched tickers only once. The company’s stock surged by over 13% during the last week, boosted by the acquisition of Kite Pharma Inc (NASDAQ:KITE). The development lifted Gilead’s stock of the ground as it had been trading at around 2% year-to-date prior to the announcement.
Gilead Sciences, Inc. (NASDAQ:GILD) announced that it had agreed to buy Kite Pharma on Monday, but the news didn’t have a big impact on the stock until Wednesday. The deal is valued at $11.90 billion in cash and is expected to be completed during the fourth quarter. Kite Pharma Inc (NASDAQ:KITE) is developing a CAR-T, a chimeric antigen receptor T-Cell therapy, which uses the body’s own immune cells to target malignant cells and can be used to treat certain blood cancers. Its CAR-T candidate axicabtagene ciloleucel is currently undergoing regulatory review in the US and Europe and the US Food and Drug Administration is scheduled to issue a decision on the drug on November 29. Novartis AG (ADR) (NYSE:NVS) has recently received the approval for its own CAR-T product, Kymriah, and last week announced its pricing at $475,000. Even though Novartis and Kite Pharma’s drugs target different types of cancer, analysts estimate that Gilead (which will complete the acquisition of Kite) will price its CAR-T drug at the same level or higher. However, by the time Gilead’s drug is approved, it will have access to some data from Novartis’ drug sales. Novartis has come under pressure from activists, who ask for lower prices, because early stages of technology were funded by taxpayers’ money.
Overall, Gilead Sciences, Inc. (NASDAQ:GILD)’s acquisition is viewed positively by its shareholders and the Wall Street in general. The company is currently known as the leader in the Hep C market, but things might change, as AbbVie Inc (NYSE:ABBV) has entered the market with its own product earlier this year. Gilead Sciences, Inc. (NASDAQ:GILD) struck what was called the best biotech deal of the decade in 2011 when it bought Pharmaset for $10.80 billion. Pharmaset was engaged in the development of a hepatitis C drug, which became the fastest-selling drug in the world. With the acquisition of Kite Pharma Inc (NASDAQ:KITE), Gilead expects to enjoy a similar success, given that CAR-T is a technology that scientists have been working on for decades, and it is expected that it will be crucial for the treatment of cancer.