Summary: UBS downgraded Arcellx Inc. to Neutral from Buy and increased its price target to $115 from $100 in the wake of Gilead Sciences' announcement to acquire the company. The acquisition, priced at $115 per share in cash plus a $5 contingent value right, implies a total equity value of $7.8 billion and led to a pronounced jump in Arcellx's stock price.
UBS made the rating change on the same day as the takeover announcement, saying the purchase by Gilead altered the investment case. The firm elevated its price target to $115 per share from $100, but moved the recommendation to Neutral from Buy.
Arcellx shares rallied sharply in response to the deal. Over the prior week the stock rose 62% to $113.75 and was trading close to its 52-week high of $114.26. Independent valuation analysis referenced by market data indicates the stock may appear overvalued relative to its Fair Value analysis.
Deal terms and valuation:
Gilead's offer sets the per-share cash price at $115 and includes a contingent value right (CVR) worth $5 per share tied to cumulative sales of $6 billion through 2029. Together, the cash consideration and CVR produce an implied total equity value for Arcellx of $7.8 billion, which represents a 68% premium to Arcellx's then market capitalization of $6.58 billion.
UBS noted that the acquisition allows Gilead to reacquire its 50% economics in anitocel, which UBS estimates assumes peak sales of about $4 billion. The bank characterized Gilead as effectively purchasing Arcellx's approximate $2 billion share at a 4x multiple on an $8 billion enterprise value.
According to UBS, the transaction grants Gilead full control over manufacturing and execution of the therapy and removes the need to split economics with Arcellx. The firm also highlighted that the deal eliminates $1.5 billion in development and regulatory milestones Gilead otherwise would have been required to pay.
Regulatory and development timeline:
The therapy in question has an estimated approval date of December 23, 2026, for use in fourth-line and later multiple myeloma. Arcellx is also conducting an enrollment for a second-line and later study that could support a potential filing and approval as early as 2028.
Market and analyst reactions:
Following the acquisition announcement and UBS's update, several other analyst firms adjusted their ratings and price targets for Arcellx. Stifel lowered its rating to Hold from Buy and set a price target of $115. Evercore ISI moved the stock to In Line from Outperform, with a price target unchanged at $115. Truist Securities downgraded Arcellx to Hold from Buy and revised its price target downward to $120 from $134.
The boards of both companies have approved the transaction. The deal builds on an existing collaboration between the two firms on the investigational multiple myeloma therapy and provides Gilead with full control over the asset - removing prior profit-share arrangements, milestones, and royalties tied to the program.
Bottom line: The proposed acquisition at $115 per share plus a $5-per-share contingent payment has sharply repriced Arcellx stock, prompted a cluster of analyst rating changes and shifts in price targets, and transferred full program and manufacturing control to Gilead under terms UBS and other analysts have quantified.