Investing.com - Evercore ISI downgraded Arcellx Inc. (NASDAQ:ACLX) to In Line from Outperform on Monday with a price target of $115.00.
The downgrade follows the announcement that Gilead Sciences is acquiring Arcellx for $115 per share, representing an enterprise value of approximately $7.8 billion, plus a $5 contingent value right. The offer represents a substantial premium, with shares jumping from a previous close of $66.53 to $113.81, though InvestingPro data suggests the stock may be overvalued at this acquisition price based on its Fair Value analysis.
Evercore ISI noted that the acquisition should not be surprising given the existing relationship between the two companies. Gilead and Arcellx already partner on anito-cel, and Gilead owns approximately 11.5% of Arcellx.
The partnership had given Gilead an inside view of the program's development. Some market participants believed Gilead would not rush to acquire Arcellx since it would book partnered sales regardless.
Evercore ISI stated that if Arcellx were to sell, Gilead was always the most likely buyer given the strategic fit between the companies.
In other recent news, Gilead Sciences announced its acquisition of Arcellx for $115 per share in cash, plus a contingent value right of $5 per share, totaling an implied equity value of $7.8 billion. This acquisition represents a significant premium over Arcellx's previous stock price and provides Gilead with full control over anito-cel, a promising CAR T-cell therapy for multiple myeloma. Truist Securities responded by downgrading Arcellx to Hold from Buy, adjusting its price target to $120, citing the acquisition's impact on future stock value. Additionally, Rothschild Redburn downgraded Arcellx to Neutral, expressing concerns over competition, despite maintaining a positive outlook on anito-cel's potential. Meanwhile, Stifel retained its Buy rating on Arcellx, highlighting promising safety data from recent in vitro studies of anito-cel. This acquisition marks a pivotal moment for both companies, as it ends profit-sharing and royalty agreements related to anito-cel. The contingent value right offers additional compensation contingent upon achieving significant sales milestones for anito-cel. These developments reflect a dynamic period for Arcellx as it transitions under Gilead's umbrella.