Evercore ISI moved to downgrade Arcellx Inc. (NASDAQ:ACLX) to In Line from Outperform on Monday, assigning a price target of $115.00 a share.
The analyst action arrived in the wake of Gilead Sciences' announcement that it will acquire Arcellx for $115 in cash per share, along with a $5 per share contingent value right (CVR). The transaction has been reported as representing an enterprise value of roughly $7.8 billion.
The market reacted sharply to the deal. Arcellx shares jumped from a prior close of $66.53 to $113.81 on the takeover news, a move that reflects a substantial premium over the stock's trading level immediately before the announcement. At the same time, a Fair Value analysis cited in market commentary indicates the company may be overvalued at the takeover price.
Evercore ISI noted that Gilead was a logical acquirer given the two companies' existing ties. The firms already collaborate on anito-cel, and Gilead is a significant Arcellx investor, holding approximately 11.5% of the company. That relationship provided Gilead with a close perspective on the development of the anito-cel program.
Some market observers had argued that Gilead might not hasten to buy Arcellx because the partnership structure already allowed it to record partnered sales. Evercore ISI, however, said that if Arcellx were to be sold, Gilead was always the most likely buyer given the strategic alignment between the two companies.
Beyond Evercore ISI's move, several other brokerages updated their stances following the acquisition announcement. Truist Securities lowered its recommendation on Arcellx to Hold from Buy and adjusted its price target to $120, citing the acquisition's consequences for future stock value. Rothschild Redburn cut its rating to Neutral while continuing to view anito-cel's potential favorably but flagging competitive concerns. Stifel maintained a Buy rating, pointing to encouraging safety data from recent in vitro studies of anito-cel.
The deal brings several structural changes to the commercial arrangement for anito-cel. By taking full ownership, Gilead will end profit-sharing and royalty agreements tied to the program. The CVR component of the transaction provides Arcellx shareholders with potential upside contingent on achieving substantial sales milestones for the therapy.
Analysts and investors now face a set of valuation and competitive questions. The takeover price locks in a material premium for current shareholders, but some valuation metrics suggest the acquisition price may outpace the program's fair value under certain analyses. Meanwhile, the transition to full ownership by Gilead changes the incentives and revenue flows that had governed the partnered arrangement.
As Arcellx moves under Gilead's umbrella, the market will be watching how the integration affects development timelines, commercial strategy for anito-cel, and the competitive landscape for CAR T-cell therapies in multiple myeloma.