Gilead Sciences has agreed to buy Palo Alto-based CV Therapeutics for $1.4 billion dollars.

According to SF Gate, Gilead Sciences will pay $20 per share for CV Therapeutics, which reported $154.5 million in revenue in 2008.  Most of that revenue comes from Ranexa, a drug from chronic angina.

Is this a good deal for Gilead Sciences?

Well, SF Gate reported that a Citi investment research analyst backed the deal as making "strategic sense" but described the price as "very steep."

The Mercury News explained the purchase as part of an overall Gilead strategy to acquire other companies and product lines in order to bolster their pipeline, which has been historically focused on HIV drugs.  The Mercury News reported:

[T]he company primarily owes its commercial success to its HIV drugs — Viread, Emtriva, Truvada and Atripla — which won FDA approval respectively in 2001, 2003, 2004 and 2006.Those drugs dominate the HIV-drug market and provide the vast majority of Gilead’s revenue, which totaled $5.34 billion in 2008, a 26 percent increase from 2007. On the basis of those sales, Gilead is the world’s third-biggest biotech company, behind Amgen of Thousand Oaks and Genentech of South San Francisco, according to data compiled by investment bank Jefferies & Co.To stay profitable, Gilead has been eager to branch out.

Some commentators, however, have suggested that the real value to this deal for Gilead Sciences is not so much the CV Therapeutics pipeline as it is the CV Therapeutics sales force. 

The In Vivo Blog reported as follows:

[Gilead] has also built a budding cardiovascular franchise centered around its pulmonary arterial hypertension drug Letairis and a Phase III drug for resistant hypertension called daruesentan. There’s a strategic fit argument, therefore, when it comes to Gilead’s buying CVT: the Palo Alto-based biotech provides the company with some additional diversification in a bulked up cardiology franchise–CVT already markets Ranexa and Lexiscan–as well as a ready-made sales force to market the products.

According to In Vivo Blog, there is the potential, however, for one additional Gilead benefit to doing this deal: full ownership rights in Lexiscan may eventually revert to CV Therapeutics, pending the outcome of litigation with Astellas.  if Gilead were to obtain full rights in Lexiscan, In Vivo Blog anticipates that this would be a real boost to Gilead’s bottom line. 

All in all, the consensus seems to be that Gilead took a bit of a financial risk in going forward with this deal, but that the risk is a reasonable one, which is in line with Gilead’s overall business strategy.  In the end, however, only time will tell if the move truly pays off for Gilead.