San Francisco Chronicle - October 3, 2006
Bernadette Tansey, btansey@sfchronicle.com.

Shares in Myogen, based in the Denver area, soared after Foster City's Gilead said it will offer $52.50 per share, a 50 percent premium over Myogen's Friday closing price of $35.08.

Norbert Bischofberger, Gilead's executive vice president of research and development, said the Myogen acquisition is a key element of the company's next growth phase.

"We've been looking to expand into other areas,'' Bischofberger said.

Until now, Gilead has focused on developing treatments for infectious diseases. Buying Myogen, which is exploring treatments for noninfectious lung diseases, represents a diversification for the company. But it also reinforces Gilead's mission of addressing unmet needs in the treatment of severe illnesses, Bischofberger said.

Some investors could be taken aback by Gilead's venture off its familiar turf, said John McCamant, editor of the Medical Technology Stock Letter. But Gilead is a well-run company with a good chance of profiting from the takeover, he said.

"They're not just an HIV company,'' McCamant said. "They're a science-based pharmaceutical.''

Gilead's annual revenues exceeded $2 billion for the first time in 2005, with sales growth driven by HIV drugs. In July, Gilead received Food and Drug Administration approval for Atripla, the first treatment that combines the three drug types used for a complete HIV regimen in a single pill taken only once a day. Atripla includes two Gilead drugs and Bristol-Myers Squibb's Sustiva.

Gilead also developed Tamiflu, an antiviral drug that lessens symptoms of seasonal influenza and could also be useful in the event of a bird flu pandemic.

Gilead dropped a hint of its move into lung disease in August when the company paid $365 million to acquire Corus Pharma, a privately held Seattle company whose lead drug candidate is an inhaled antibiotic in clinical trials for treatment of lung infections in people with cystic fibrosis.

With the much larger Myogen purchase, Gilead acquires a research program in lung disorders not caused by infection. Myogen has completed late-stage trials on its lead drug candidate, ambrisentan, for the treatment of pulmonary arterial hypertension.

The disease occurs when the blood vessels feeding the lungs narrow and thicken, forcing the heart to strain to circulate blood. Pressure builds up in the arteries, and the heart can fail. Myogen expects to submit ambrisentan for FDA approval by the end of the year.

The Swiss company Actelion already sells a drug with a similar mechanism, Tracleer. Bischofberger said Gilead is hoping to prove that the Myogen drug is safer than Tracleer, whose label carries warnings of possible liver injury and birth defects. Bischofberger estimated that Tracleer revenues were about $340 million for the first half of 2006.

Myogen also markets Flolan for the intravenous treatment of more advanced cases of pulmonary hypertension. A Brisbane company, CoTherix, markets the inhalable drug Ventavis, which has a mode of action similar to Flolan. CoTherix is also developing an experimental drug, Fasudil, with a novel mechanism for remedying pulmonary hypertension.

CoTherix chief executive Donald Santel estimates that 50,000 people in the United States suffer from pulmonary hypertension, but only 17,000 are diagnosed and under treatment.

Gilead said it expects the Myogen purchase to dilute its earnings in 2007 and 2008, but boost earnings starting in 2010. Gilead shares dropped $4.49 or 6.53 percent to close at $64.28 Monday. Myogen shares gained $16.36 or nearly 47 percent to close at $51.44.

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