Pharmasset, a Princeton, N.J., company with just over 80 employees and no commercial products, is developing a compound that Gilead and analysts say is on track to be part of the first all-oral regimen for treating hepatitis C. Experts say that gives it a distinct advantage over current treatments in the potentially huge U.S. and global markets for such drugs.
Gilead, which has a blockbuster franchise for medicines that treat HIV, the virus that causes AIDS, is betting that Monday's $137-a-share deal will help it become similarly dominant in hepatitis C. Market-research firm Decision Resources estimates the global hepatitis C market will hit $16 billion in 2015, up from just $1.7 billion in 2010.
The purchase price represents a nearly 89% premium to Pharmasset's closing price Friday, putting it in the rarified ranks of Bristol-Myers Squibb Co.'s $2.1 billion purchase of Medarex and its novel cancer drug in 2009, which carried a 90.5% premium.
In 4 p.m. trading Monday on the Nasdaq Stock Market, Pharmasset shares were up 85% at $134.14.
An estimated four million Americans have hepatitis C, but only about a million of them have been diagnosed. Most victims go untreated rather than endure weekly injections of interferon and twice-daily ribavirin pills—a combination with harsh side effects—for as long as a year. Only about 50% of those treated are cured of the potentially fatal blood-borne virus.
Globally, some 170 million people are thought to have hepatitis C, which can be transmitted sexually, as well as by shared needles and at tattoo parlors. It can cause cirrhosis of the liver, and is the chief reason in the U.S. for liver transplants.
Our own nucleotide clearly doesn't have a profile to allow it to go forward,” he said. “The products that they have, while just entering Phase 3, I think have a high degree of predictability, in terms of how they will perform.
‘‘So we made a very difficult decision to do an acquisition which is much larger than we typically like to do, but one that we felt was very important for the company,'' Milligan said.
Three stages of testing are generally required for U.S. regulatory approval of a new drug.
Hepatitis C is a viral infection that can lead to swelling of the liver. As many as 170 million people globally carry the virus, which is transmitted through exposure to infected blood, and more than 350,000 die from related illnesses each year, according to the Geneva-based World Health Organization.
Current $3 Billion Market
The hepatitis C market is currently about $3 billion worldwide, Andrew Berens, a senior health-care analyst with Bloomberg Industries, in Skillman, New Jersey, said in a telephone interview.
Earlier this year, Merck & Co. and Vertex Pharmaceuticals Inc. won approval for the first new therapies for hepatitis C in almost a decade. Companies including Inhibitex Inc. and Achillion Pharmaceuticals Inc. are also racing to develop medicines for the virus.
Erik Gordon, a business professor at the University of Michigan, also questioned the price of the Gilead's proposed acquisition.
‘‘Gilead is paying too much, paying all in cash, borrowing money to do it, diluting earnings for three or more years -- to get a drug candidate or two in an area that was supposedly a core strength at Gilead,'' Gordon wrote in an e-mail. ‘‘You can do a lot of research for $11 billion.''
The purchase, which gives Gilead three potential treatments for chronic HCV now in development by Pharmasset, is five times bigger than the company's 2006 deal for Myogen Inc. for $2.2 billion, according to Bloomberg data.
HIV Medicines
Gilead sells Atripla, Truvada and Viread, medicines for HIV that generated $2.9 billion, $2.7 billion and $732 million in 2010 revenue, respectively. The company had $7.9 billion in sales last year. Gilead's experience with HIV treatment regimens will help bring the hepatitis C drugs through clinical development, Chief Executive Officer John Martin said.
Pharmasset reported data on PSI-7977 earlier this month, showing that 40 patients who received the therapy were responsive after 12 weeks. About half the patients had been followed up to 24 weeks, and all were cured. There were no significant adverse events. The drug was tested in combination with ribavirin, a medication currently used in treating the disease, in patients with hepatitis C genotypes 2 and 3. Genotype 1 is most common and hardest to treat.
Roche Holding AG, based in Basel, Switzerland, agreed in October to buy Anadys Pharmaceuticals Inc., another maker of experimental medicines for hepatitis C, for about $230 million.
‘‘We see continued consolidation in the space, potentially including Achillion, which will report important proof-of- efficacy data by year-end and is actively exploring strategic opportunities,” Edward Tenthoff, an analyst with Piper Jaffray & Co., wrote yesterday in a research note.
Achillion CEO Michael Kishbauch said Nov. 17 that his company based in New Haven, Connecticut, is in “advanced discussions” with potential partners or acquirers. The hepatitis C market may be worth $20 billion by 2020, Kishbauch said in an interview.
No comments:
Post a Comment