Darwin's Our Take: Big Pharma, home health and digital health companies notch big-ticket deals

As February drew to a close, several high-dollar acquisitions made the headlines both here in the U.S. and internationally.

In the largest of the deals, Gilead Sciences agreed to acquire Arcellx, a biotech based in Redwood City, Calif. That transaction has an equity value of $7.8 billion, which includes a cash payment of $115 per share at closing along with a contingent value right (CVR) of $5 per share.

Through its Kite subsidiary, Gilead has been collaborating with Arcellx since 2022 on developing the biotech’s lead pipeline candidate, an investigational BCMA-directed CAR T-cell therapy known as anitocabtagene autoleucel, or anito-cel, as a treatment for patients with multiple myeloma. BCMA is a protein that’s highly expressed on the surface of multiple myeloma cells.

Arcellx has submitted a BLA for anito-cel, and the FDA set Dec. 23 as the date by which it will make an approval decision.

The CVR is payable if anito-cel is approved and generates cumulative global net sales of $6 billion by the end of 2029.

Leading up to the announcement of the acquisition, Gilead already had an 11.5% equity stake in Arcellx.

Having been approved by both companies’ boards, the transaction is expected to close during the second quarter if regulatory approval is obtained and other customary closing conditions are satisfied.  

Anito-cel would compete with Johnson & Johnson’s Carvykti (ciltacabtagene autoleucel), a blockbuster cell therapy initially approved in 2022 and subsequently  approved for an expanded indication in 2024.

Gilead’s CEO, Daniel O’Day, said anito-cel has best-in-class potential for multiple myeloma because of its demonstrated high efficacy and favorable safety and tolerability profile.

In another Big Pharma transaction, British drugmaker GSK agreed to acquire 35Pharma, a private biopharma company based in Montreal, for approximately $950 million in cash.

Through the acquisition, GSK will gain HS235, an experimental activin signaling inhibitor being developed as a treatment for cardiopulmonary diseases. It, too, has best-in-class potential, according to the announcement.

Pulmonary hypertension (PH) is the initial focus of HS235’s clinical development program, which is still in the early stages.

GSK said the drug’s underlying mechanism “offers the potential for broad metabolic benefits, including fat-selective weight loss, preservation of lean mss, and improved insulin sensitivity. … These attributes may offer additional clinical and commercial value given the high prevalence of obesity and insulin resistance in the PH population.”

Tony Wood, GSK’s chief scientific officer, noted that HS235 may also reduce the risk of bleeding, unlike existing treatments for PH.  

The acquisition is subject to regulatory clearances and other customary closing conditions. GSK did not estimate when the transaction might be completed.

In the home health arena, Dallas-based Enhabit agreed to be acquired by private equity firm Kinderhook Industries. Enhabit shareholders will receive $13.80 per share in cash, giving the deal an enterprise value of approximately $1.1 billion.

Enhabit has nearly 250 home health locations and more than 115 hospice locations across 34 states. Before it was spun off into a publicly traded company in 2022, Enhabit was part of Encompass Health.

Enhabit’s board of directors unanimously approved the transaction, which is expected to close in the second quarter if regulators and the company’s shareholders approve and other closing conditions are met.

Enhabit will retain its name and brand, operating as a private company after the acquisition has been finalized.

Meanwhile, the direct-to-consumer health-and-wellness platform Hims & Hers Health set the stage for global expansion by entering into a definitive agreement to acquire Eucalyptus, described in the announcement as Australia’s largest digital health provider, for $1.15 billion.  

Under the agreement, Hims & Hers will pay about $240 million in cash at closing and the remainder as guaranteed deferred and performance-based earn-out payments through early 2029.

Hims & Hers offers virtual consultations, as well as personal care products and over-the-counter and prescription medications for sexual health, weight loss, hair loss, dermatology, primary care, mental health and certain specialty care areas, such as cardiovascular health and diabetes support.

Eucalyptus’ services and brands complement those available through Hims & Hers. For example, the company operates a platform called Juniper that focuses on weight management, a men’s health program called Pilot, and a platform called Kin that centers on fertility and reproductive health.

According to the press release, Eucalyptus has served more than 775,000 customers and “facilitated nearly two million consultations across Australia, the U.K., Germany, Japan, and Canada.” Australia and Japan will be new markets for San Francisco-based Hims & Hers.

If customary closing conditions are satisfied, including regulatory approvals, the acquisition is expected to close this summer.

Novo Nordisk recently filed a lawsuit against Hims & Hers for patent infringement. The two companies have engaged in a multiyear tug-of-war over Hims & Hers’ compounded generic versions of Novo Nordisk’s Wegovy/Ozempic (semaglutide).

Disclosure: GSK and Novo Nordisk are Darwin Research Group clients.

What else you need to know

The Department of Justice and Ohio’s attorney general are suing OhioHealth, claiming the health system has engaged in anticompetitive business practices that drive up costs for patients and employers. Specifically, the complaint alleges that OhioHealth, which has 16 hospitals and is the largest health system in central Ohio, forces insurers to include all of OhioHealth’s hospitals and employed physicians in their commercial insurance networks through the use of “all-or-nothing” contracts. This type of arrangement, the lawsuit contends, prevents insurers from “offering budget-conscious plan designs that promote competition.”

The complaint further alleges that OhioHealth uses its dominant market position to charge insurers “significantly higher” reimbursement rates than competitors do without providing services of generally higher quality. The DOJ and AG are asking the court to prevent OhioHealth from enforcing contract terms that they say violate state and federal antitrust laws. In a prepared statement, OhioHealth said it is confident in its position and remains “committed to full compliance with all applicable laws and regulatory requirements.”

Researchers at Mount Sinai found that ChatGPT Health has “blind spots” when advising users on whether to seek urgent or emergency care, raising concerns about how safe the consumer AI tool is. During their assessment, they also found that ChatGPT Health’s suicide-risk alerts — the tool is designed to direct users to the 988 Suicide and Crisis Lifeline in high-risk situations — were sometimes triggered in low-risk instances but also failed to appear when users indicated specific plans for self-harm.

The research team conducted 960 interactions with the AI tool (in 60 structured clinical scenarios across 21 medical specialties) and compared ChatGPT Health’s recommendations with physician consensus. According to a press release, the investigators found that “while the tool generally handled clear-cut emergencies correctly, it under-triaged more than half of cases that physicians determined required emergency care.” They noted that ChatGPT Health often advised patients to wait even when it correctly identified “dangerous findings” in its written explanations.

The researchers said their findings, which were published online Feb. 23 in Nature Medicine, “do not suggest consumers should abandon AI health tools altogether.” Instead, they emphasized the need for continuous independent evaluation.  

GoodRx launched a direct-to-consumer program called Employer Direct that lets employers contribute a subsidy toward their employees’ cost for certain brand drugs on top of the manufacturer-sponsored prices available through GoodRx. In this way, employers can lower their employees’ cost for “high-impact” drugs without adding the drugs to their health plan’s existing benefits, GoodRx explained. Through the program, employers can also partner with GoodRx on custom versions of the company’s condition-specific telemedicine offerings, which integrate clinical care, prescribing, and pharmacy fulfillment. Grocery chain Hy-Vee was among the first companies to begin using Employer Direct at the start of this year, initially focusing on GLP-1 therapies.

United Healthcare will soon enforce a policy restricting access to specialty care for members of the company’s Medicare Advantage HMO and HMO-POS plans. Under the policy, which was announced last fall and took effect Jan. 1, these members are required to get a referral from a primary care provider before accessing certain specialist services in outpatient, home, or office settings.

According to a recent update, on May 1 the insurer will begin denying claims for specialist services without a referral. The notice lists services that are exempt from the policy, including those provided by oncologists, ob/gyns, anesthesiologists (as long as the services are not for pain management), radiologists, and emergency medicine specialists. Health advocates have cautioned that the policy will lead to delays in care, particularly in light of PCP shortages.

Merck is restructuring its core pharmaceutical business into two distinct units, one of which will focus solely on oncology. The other, called the Specialty, Pharma & Infectious Diseases Unit, will encompass Merck’s remaining drug business. Merck’s CEO, Robert Davis, said in a news release, “As we advance our pipeline and drive commercial success across an increasingly diversified portfolio, … we are sharpening our focus on delivering innovative medicines for patients and creating long-term value for our stakeholders.”

Merck’s Keytruda (pembrolizumab), a blockbuster oncology immunotherapy, is set to lose exclusivity in the U.S. in 2028. The company has been growing and diversifying its pipeline in anticipation of that and says it expects “more than 20 new growth drivers over [the] next several years, almost all with blockbuster potential.”

What we’re reading

The Digital-First Future of Health Care. BCG, 2.24.26

ChatGPT Health performance in a structured test of triage recommendations. Nature Medicine, 2.23.26 (abstract and supplementary tables available without subscription)

When ChatGPT Health Becomes The Health Record For Direct-To-Consumer Care. Health Affairs, 2.24.26