On April 7, 2020, we acquired all of the then issued and outstanding common stock of Forty Seven, a clinical-stage immuno-oncology company focused on developing therapies targeting cancer immune evasion pathways and specific cell targeting approaches, for a price of $95.50 per share in cash, for total consideration of $4.7 billion, net of acquired cash. As a result, Forty Seven became our wholly-owned subsidiary. Forty Seven’s lead program, magrolimab, is an investigational monoclonal antibody in clinical development for the treatment of myelodysplastic syndrome, acute myeloid leukemia, non-Hodgkin lymphoma and solid tumors.

We accounted for the transaction as an asset acquisition since the lead asset, magrolimab, represented substantially all the fair value of the gross assets acquired. At the acquisition date, we recorded a $4.5 billion charge representing an acquired IPR&D asset with no alternative future use in Acquired in-process research and development expenses on our Consolidated Statements of Income. In connection with this acquisition, we recorded $202 million of assets acquired primarily consisting of deferred tax assets. Liabilities assumed were not material. We also recorded stock-based compensation expense of $144 million related to the cash settlement of unvested Forty Seven employee stock awards attributable to post-acquisition services, which was primarily recorded in Research and development expenses on our Consolidated Statements of Income, for the year ended December 31, 2020.

On September 13, 2020, we entered into an agreement and plan of merger (“Agreement and Plan of Merger”) to acquire Immunomedics, a company focused on the development of antibody-drug conjugate (“ADC”) technology. Immunomedics researches and develops biopharmaceutical products, particularly antibody-based products for patients with solid tumors and blood cancers, and manufactures and markets Trodelvy. Trodelvy, a Trop-2-directed ADC developed by Immunomedics, is the first ADC FDA approved for the treatment of adult patients with metastatic triple-negative breast cancer (“mTNBC”).

On October 23, 2020, the acquisition was completed and Immunomedics became a wholly-owned subsidiary of Gilead. The financial results of Immunomedics were included in our consolidated financial results for the year ended December 31, 2020 from the date of the acquisition. Immunomedics contributed $49 million of revenues and an immaterial net loss from the date of the acquisition through December 31, 2020.

The cash consideration for the acquisition was $20.6 billion, consisting of a $20.4 billion cash payment to the outstanding Immunomedics common stockholders and a $242 million cash payment to equity award holders of Immunomedics for the vested equity awards and accelerated vesting of stock-based awards attributable to the pre-combination period. We financed the acquisition with the majority of the proceeds from the September 2020 senior unsecured notes offering, an additional $1.0 billion borrowing under a new senior unsecured term loan facility and cash on hand. See Note 12. Debt and Credit Facilities for additional information.

The acquisition of Immunomedics was accounted for as a business combination using the acquisition method of accounting. This method requires, among other things, that assets acquired and liabilities assumed be generally recognized at fair value as of the acquisition date. The fair value estimates for the assets acquired and liabilities assumed were based upon valuations using information known and knowable as of the date of this filing. Changes to these assumptions and estimates could cause an impact to the valuation of assets acquired, including intangible assets, goodwill and the related tax impacts of the acquisition, as well as legal and other contingencies. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date.

We also recorded share-based compensation expense of $289 million related to the cash settlement of the accelerated share-based compensation expense attributable to the post combination period, which was primarily recorded in Selling, general and administrative expenses and Research and development expenses on our Consolidated Statements of Income for the year ended December 31, 2020. We also recorded other acquisition-related expenses of $39 million, primarily representing closing costs and related fees, in Selling, general and administrative expenses on our Consolidated Statements of Income for the year ended December 31, 2020.


(in millions)	Amount
Cash and cash equivalents	$	726
Inventories	946
Intangible assets
Finite-lived intangible asset	4,600
Acquired IPR&D	15,760
Outlicense contract	175
Deferred income taxes	(4,565)
Liability related to future royalties	(1,100)
Other assets (and liabilities), net	64
Total identifiable net assets	16,606
Goodwill	3,991
Total consideration transferred	$	20,597

The fair value step-up adjustment of $881 million, included in the inventories of $946 million as of the acquisition date, was primarily determined by the estimated selling price of finished inventory less the cost to complete the manufacturing process and selling effort. The step-up adjustment is being recorded in Cost of goods sold on our Consolidated Statements of Income as the inventory is sold to customers from the acquisition date.

The finite-lived intangible asset of $4.6 billion represents the estimated fair value of Trodelvy for mTNBC as of the acquisition date. The fair value was determined by applying the income approach using unobservable inputs to estimate probability-weighted net cash flows attributable to Trodelvy for mTNBC and a discount rate of 7.0%. The discount rate used represents the estimated rate that market participants would use to value this intangible asset. This intangible asset is being amortized over an estimated useful life of 12 years.

Acquired intangible assets related to IPR&D consist of Trodelvy for hormone receptor positive (“HR+”), human epidermal growth factor receptor 2 negative (“HER2-”), metastatic breast cancer, Trodelvy for non-small cell lung cancer (“NSCLC”) and Trodelvy for urothelial cancer. The estimated aggregate fair value of $15.8 billion as of the acquisition date was determined by applying the income approach using unobservable inputs to estimate probability-weighted net cash flows attributable to these assets and a discount rate of 7.0%. The discount rate used represents the estimated rate that market participants would use to value these intangible assets.

Some of the more significant assumptions inherent in the development of intangible asset fair values include: the amount and timing of projected future cash flows (including revenue, cost of sales, research and development costs, sales and marketing expenses); probability of success; the discount rate selected to measure inherent risk of future cash flows; and the assessment of the asset’s life cycle and the competitive trends impacting the asset, among other factors.

We also recorded an intangible asset related to a license and supply agreement with a third party, which was entered into by Immunomedics prior to the acquisition. Under the agreement, the third party was granted an exclusive license to develop and commercialize Trodelvy in certain territories in Asia and make certain sales milestones and royalty payments to us. The acquisition date fair value of $175 million was determined by estimating the probability-weighted net cash flows attributable to the outlicense and a discount rate of 7.0%. The discount rate represents the estimated rate that market participants would use to value this intangible asset. This intangible asset is being amortized over an estimated useful life of 15 years on a straight-line basis.

We assumed a liability related to a funding arrangement, which was originally entered into by Immunomedics and RPI Finance Trust, a Delaware statutory trust (“RPI”), prior to the completion of our acquisition of Immunomedics. Under the funding agreement, RPI has the right to receive certain royalty amounts, subject to certain reductions, based on the net sales of Trodelvy for each calendar quarter during the term of the agreement through approximately 2036. The acquisition date fair value of the liability was estimated as $1.1 billion, which was primarily determined based on current estimates of future royalty payments to RPI over the life of the arrangement using the real options method and effective annual interest rate of 2.5%. The liability is amortized using the effective interest rate method, resulting in recognition of interest expense over 16 years. The estimated timing and amount of future expected royalty payments over the estimated term will be re-assessed each reporting period. The impact from changes in estimates will be recognized in the liability and the related interest expense prospectively. The inputs used for valuation of this liability are unobservable and are considered Level 3 under the fair value measurement and disclosure guidance. The liability related to future royalties was categorized as debt and primarily included in Long-term debt, net on our Consolidated Balance Sheets. See Note 12. Debt and Credit Facilities for additional information.

The excess of the consideration transferred over the fair values of assets acquired and liabilities assumed of $4.0 billion was recorded as goodwill, which primarily reflects the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill recognized for Immunomedics is not expected to be deductible for income tax purposes.

The primary adjustments include: (i) post-combination compensation expense of $289 million related to the acceleration of unvested share-based awards of Immunomedics, (ii) the impact of additional interest expense in connection with the Immunomedics acquisition borrowings as well as the liability related to future royalties, (iii) amortization of the finite-lived intangible asset related to Trodelvy for mTNBC beginning on April 22, 2020 when it received FDA accelerated approval, (iv) amortization of the acquired Immunomedics’ inventory related to Trodelvy mTNBC over the period in which the inventory was expected to be sold beginning on April 22, 2020, (v) amortization of the license and supply agreement with a third party over an estimated useful life of 15 years, (vi) the impacts of the sale of marketable securities based on their use as a source of liquidity to fund the acquisition, and (vii) acquisition-related transaction costs. The unaudited pro forma financial results do not reflect any operating efficiencies or potential cost savings which may result from the consolidation of the operations of Gilead and Immunomedics. Accordingly, these unaudited pro forma financial results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of 2019, nor are they indicative of future results of operations.

On December 10, 2020, we entered into a definitive agreement pursuant to which we expect to acquire MYR, a German biotechnology company, for approximately €1.2 billion in cash (or approximately $1.4 billion using a foreign currency exchange rate of 1.2 at December 31, 2020), which is payable upon closing of the transaction and a potential future milestone payment of up to €300 million (or approximately $360 million using a foreign currency exchange rate of 1.2 at December 31, 2020), upon FDA approval of Hepcludex®. Both payments are subject to customary adjustments. MYR focuses on the development and commercialization of therapeutics for the treatment of chronic hepatitis delta virus (“HDV”). The acquisition will provide Gilead with Hepcludex, which was conditionally approved by the European Medicines Agency (“EMA”) in July 2020 for the treatment of chronic HDV infection in adults with compensated liver disease.

Consummation of the transaction is subject to expiration or termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act, and receipt of merger control and foreign direct investment approvals in certain European jurisdictions and certain other customary closing conditions. We anticipate that the closing of the transaction will occur by the end of the first quarter of 2021 and expect our acquisition of MYR to be accounted for as a business combination using the acquisition method of accounting upon closing.