AstraZeneca approached Gilead Sciences about possible merger

AstraZeneca approached Gilead Sciences last month about a possible merger, although the two companies aren't currently in formal talks, as first reported by Bloomberg.

Why it matters: This still feels highly unlikely but, if consummated, would be the largest health care merger in history. AstraZeneca has a current market cap of around $140 billion, while Gilead's is $96 billion. It also could portend a rash of pharma deal-talk ahead of treatments or vaccines for COVID-19.

The bottom line: "Most large biopharma deals arise from a position of distress, not strength, and Gilead today is far from distressed," per an SVB Leernik analyst note.

• "It may suggest that AZN is looking to leverage its valuation and current strategic position by making a large acquisition to diversify away from dependence on its blockbuster oncology franchise."
• "Other targets, such as perhaps Biogen, Amgen, or Alexion, may be equally suitable for these purposes, and could prove more amenable to overtures."

Go deeper: Wall Street forecasts blockbuster sales for Gilead's coronavirus drug remdesivir