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Pharma Megadeal Talks

08 June 2020 by jbchevrel

Not a big CDS mover, but the size of that potential deal is probably worth a post. It was reported over the weekend that AstraZeneca Plc (AZN – valued $140b) informally contacted Gilead Sciences Inc. (GLD – valued $96b) last month to gauge its interest in a possible tie-up, according to anonymous sources. AZN CDS and bonds (2024 € and 2028 €) were little changed. CDS looks wider +3.5 on our end, from a very tight sub-20 level. An agreement would see the largest healthcare deal ever made. Above Bristol-Myers Squibb Co.’s $74b takeover of Celgene Corp. AZN didn’t specify terms for any transaction, they said. While GLD has discussed the idea with advisers, no decisions have been made on how to proceed and the companies aren’t in formal talks yet. Exist some political and strategic barriers, although this weekend’s news shows signs of potential for consolidation in the pharm sector. Indeed, it seems that GLD is not currently interested in selling to or merging with another big pharmaceutical company, preferring instead to focus its deal strategy on partnerships and smaller acquisitions. GLD’s RRemdesivir, potential covid treatment, went through clinical trials in recent months. It has an emergency use authorisation from the FDA. It has been shown in some early studies that Remdesivir can shorten hospital stays for people suffering from Covid. The investment bank SVB Leerink has forecast that sales of that drug alone may reach $7.7b by 2022.