SCHEDULE: Gilead to Acquire Arcellx in $7.8B Cash & CVR Deal

Gilead Sciences, Inc. announced a definitive agreement to acquire Arcellx, Inc. for approximately $7.8 billion in cash and contingent value rights.

Summary

• Gilead Sciences, Inc., through its wholly-owned subsidiary Purchaser, will acquire all outstanding shares of Arcellx, Inc.
• The acquisition price is $115.00 per share in cash (Closing Amount) plus one contractual contingent value right (CVR) per share.
• Each CVR represents the right to receive a contingent payment of $5.00 upon the achievement of a specified milestone.
• The total consideration for the acquisition is approximately $7.8 billion, with an additional $0.3 billion potentially payable for CVRs if the milestone is achieved.
• Gilead previously invested in Arcellx, purchasing 3,478,261 shares for $100.0 million on January 26, 2023, and 3,242,542 shares for $200.0 million on December 28, 2023.
• Gilead currently beneficially owns 6,720,803 shares of Arcellx, representing 11.5% of Arcellx's common stock outstanding as of February 19, 2026.
• Certain Arcellx stockholders, including affiliates of SR One Capital, New Enterprise Associates, and Arcellx directors/officers, collectively owning 6,033,683 shares (approximately 10.3% of outstanding shares), have entered into Tender and Support Agreements.
• The acquisition follows a collaboration agreement between Kite Pharma (a Gilead subsidiary) and Arcellx for the co-development and co-commercialization of CART-ddBCMA and next-generation CAR-T cell therapy products.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive for Arcellx shareholders due to the significant premium and potential CVR upside, and strategically beneficial for Gilead in expanding its cell therapy portfolio.

Positives

• Arcellx shareholders will receive a significant premium, with the final offer of $115.00 cash plus a $5.00 CVR per share, substantially higher than Gilead's initial non-binding proposal of $98.00 per share.
• The CVR provides Arcellx shareholders with potential additional upside if a specific clinical or regulatory milestone is achieved.
• Gilead will gain full control over Arcellx's innovative CAR-T cell therapy pipeline, including CART-ddBCMA, strengthening its position in oncology and cell therapy.
• The transaction provides a clear exit strategy and liquidity for Arcellx investors.

Negatives

• Arcellx shareholders will no longer participate in the company's future growth or potential beyond the CVR payment.
• Gilead is committing a substantial amount of cash, approximately $7.8 billion, plus up to $0.3 billion for CVRs, which represents a significant capital outlay.
• The achievement of the CVR milestone is contingent and not guaranteed, introducing an element of uncertainty for Arcellx shareholders regarding the full potential value.

Risks

• The consummation of the tender offer is subject to customary conditions, including a minimum tender condition where more than 50% of outstanding shares must be validly tendered and not withdrawn.
• Regulatory approvals, such as the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, are required.
• The absence of any law or order prohibiting the consummation of the Offer or the Merger in any jurisdiction where Parent or the Company has material business operations is a condition.
• The contingent payment of $5.00 per CVR is dependent on the achievement of a specified milestone, which may not occur.

Future Outlook

Following the consummation of the tender offer and merger, Arcellx will become a wholly-owned subsidiary of Gilead. Gilead intends to cause Arcellx's shares to be delisted from the Nasdaq Global Select Market and deregistered under the Securities Exchange Act of 1934.

Management Comments

• Gilead's board of directors approved the proposal to acquire Arcellx after assessing alternatives for the collaboration and relationship between the two companies.
• The purpose of the Offer is for Gilead, through Purchaser, to acquire control of Arcellx and facilitate the acquisition of all issued and outstanding shares.
• The purpose of the Merger is to acquire all issued and outstanding shares not tendered and purchased pursuant to the Offer.

Industry Context

StockSavvy.ai notes that this acquisition reinforces the ongoing trend of larger pharmaceutical companies acquiring innovative biotechnology firms to bolster their pipelines, particularly in high-growth areas like cell therapy and oncology. Gilead's move to fully integrate Arcellx's CAR-T platform, including CART-ddBCMA, positions it more strongly against competitors in the multiple myeloma treatment landscape.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• NA

Related Party Transactions

• Gilead's prior purchases of Arcellx common stock: 3,478,261 shares for $100.0 million on January 26, 2023, and 3,242,542 shares for $200.0 million on December 28, 2023.
• Collaboration and License Agreement between Kite Pharma (a Gilead subsidiary) and Arcellx for the co-development and co-commercialization of CAR-T cell therapy products, entered into on December 8, 2022.

Stakeholder Impact

• **Shareholders (Arcellx):** Will receive a significant premium for their shares in cash and CVRs, providing liquidity and a favorable exit, but will no longer hold equity in the company.
• **Shareholders (Gilead):** The acquisition represents a substantial investment aimed at strengthening Gilead's cell therapy pipeline, potentially leading to long-term growth, but involves significant capital deployment.
• **Employees (Arcellx):** Will become employees of a Gilead subsidiary, potentially experiencing changes in corporate culture, structure, and benefits.
• **Customers/Patients:** The integration into Gilead's larger infrastructure could accelerate the development and commercialization of Arcellx's CAR-T therapies, potentially benefiting patients with multiple myeloma.

Next Steps

• Purchaser will commence a tender offer to acquire all issued and outstanding shares of Arcellx Common Stock.
• The tender offer will remain open for a minimum of 20 business days, subject to possible extension.
• Following the consummation of the Offer, Purchaser will merge with and into Arcellx.
• Arcellx shares will be delisted from the Nasdaq Global Select Market.
• Arcellx shares will be deregistered under the Securities Exchange Act of 1934.
• Gilead will file a Tender Offer Statement on Schedule TO with the SEC.
• Arcellx will file a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC.

Key Dates

Recommendation

For existing Arcellx shareholders, the recommendation is to sell into the tender offer to realize the significant premium of $115.00 per share in cash plus the potential $5.00 CVR. For new investors, there is limited upside potential for Arcellx stock given the definitive acquisition agreement and the unlikelihood of a competing bid due to the Tender and Support Agreements.

Keywords

Gilead Sciences, Arcellx, Acquisition, Merger, Tender Offer, CAR-T Therapy, Biotechnology, Pharmaceuticals, Oncology, Contingent Value Right, CART-ddBCMA, Cell Therapy