Gilead agrees to buy YM BioSciences for $510 million

US biotechnology firm Gilead Sciences (Nasdaq: GILD) has agreed to acquire Canada's YM BioSciences (TSX: YM) in a deal that adds another drug candidate to its oncology portfolio and causing the Canadian firm’s shares to leap 77% to $2.88.

The $2.95-per-share transaction – a total of around $510 million and a premium of 81$ to YM’s closing price of $1.63 on Tuesday - will give Gilead rights to YM BioScience's lead drug candidate CYT387, an oral Janus kinase (JAK) inhibitor that is expected to start Phase III trials next year in the hematological cancer myelofibrosis. Gilead said it would fund the transaction with cash and expects it to close in the first quarter of 2013.

YM BioSciences reported Phase I/II data with CYT387 at the American Society of Hematology meeting in Atlanta a few days ago which showed that the combined JAK1/JAK2 inhibitor achieved a spleen response rate of 37% in myelofibrosis. In addition, the percentage of patients needing blood transfusions dropping from 44% at enrolment to less than 10% after 40 weeks' treatment.