Gilead shares surge as hep C drug scores a cure for big patient population

Posted under Blog, Bristol-Myers Squibb, Companies, Diagnostics, Funding, Gilead Sciences, Hepatitis C, Inhibitex, Medical Devices, Medical Supply, Pharmaceuticals, Pharmasset, PSI-7977, Startups, Universities, Videos by John Carroll

Gilead Sciences ($GILD) received its first bonus from the monster $10.8 billion deal to acquire Pharmasset ($VRUS) after CSO Norbert Bischofberger told analysts yesterday evening that PSI-7977 combined with ribavirin cured a group of genotype 1 hepatitis C patients after four weeks of therapy. The analysts already knew that the same treatment had performed well for genotypes 2 and 3, and promising data on the more-common genotype 1 pool added some significant luster to one of the most closely watched programs underway in the industry.

During its quarterly earnings call, Bischofberger told analysts that there were no detectable signs of the hepatitis C virus in patients after they had been taking the oral treatment for close to a month. The data supports Gilead's belief that 7977 is on a fast track to an approval that can swiftly gain blockbuster returns as it races against a bevy of rivals anxious to get to the market with an all-oral regimen that can eliminate the injections now needed to treat patients.

"It looks like Gilead will race ahead and continue to lead because its drug 7977 continues to support potential 100 percent cure rates," RBC Capital Markets' Michael Yee tells Bloomberg. "The data disclosed in genotype 1, an important population for which there was no good data yet, continues to show they can support a multibillion-dollar drug franchise with 7977."

Gilead's shares popped about 5% in overnight trading as word of the data began to spread. Hopes for an all-oral hepatitis C drug have inspired a string of deals in the field. Soon after Gilead acquired Pharmasset, Bristol-Myers Squibb ($BMY) stepped up with a $2.5 billion deal to buy Inhibitex ($INHX), giving it a horse in the big race to the FDA.

- here's the story from Bloomberg
- here's the report from TheStreet

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Bristol bags hot hep C drug developer Inhibitex for $2.5B

Posted under Blog, Bristol-Myers Squibb, Companies, Diagnostics, Funding, Gilead Sciences, Hepatitis C, Inhibitex, INX-189, Medical Devices, Medical Supply, Pharmaceuticals, Pharmasset, PSI-7977, Startups, Teva Pharmaceutical Industries, Universities, Videos by John Carroll

Proving once again that hepatitis C is the hottest disease in biotech right now, Bristol-Myers Squibb ($BMY) has stepped up to the deal table with a $2.5 billion pact to buy out Inhibitex ($INHX), a small developer with a potential game-changing treatment in mid-stage development. The deal not only marks BMS's biggest payout in 5 busy years of wheeling and dealing, it's also another clear sign that big biopharma groups are willing to shell out big bucks in order to buy a competitor in the race to a better treatment and a blockbuster market.

The prize: INX-189, a mid-stage treatment that promises to give Gilead ($GILD) a run for its money after the California company struck an $11 billion deal to buy Pharmasset ($VRUS), which has been pushing PSI-7977 in late-stage studies as a potential best-in-class therapy for hepatitis C.

"This drug is the best chance anyone has of competing with Gilead/Pharmasset," noted Brean Murray Carret's Brian Skorney, according to a report in Bloomberg. "That explains the premium."

To get the company, BMS is putting up $26 a share for Inhibitex, a big premium over its $9.87 close on January 6. But after Gilead's recent $11 billion purchase of Pharmasset, no one is saying this morning that BMS is paying too much. Analysts have been unanimous that an all-oral treatment for hepatitis C--especially one that can eliminate the need for interferon--can quickly seize a market worth $3 billion to $5 billion a year. And you can expect to see more hepatitis C deals as developers with other promising treatments get scooped up by rival companies.

BMS has been widely lionized for its "string of pearls" strategy for beefing up its pipeline. With the recent success of Yervoy the company's deal-making team has been winning kudos around the globe. That's why Teva has turned to Bristol's chief deal-maker--Jeremy Levin--to helm the much bigger company.

- read the press release
- get the story from Bloomberg

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Report: How savvy Pharmasset persuaded Gilead to boost its offer by 37%

Posted under Blog, Companies, Diagnostics, Funding, Gilead Sciences, Hepatitis C, Medical Devices, Medical Supply, Pharmaceuticals, Pharmasset, PSI-7977, Startups, Universities, Videos by John Carroll

Bloomberg has gathered at least a few pieces of the puzzle surrounding Gilead Science's ($GILD) winning $10.8 billion bid for the red-hot hep C drug developer Pharmasset ($VRUS). And anyone interested in learning how to get the most for a biotech company should pay close attention.

Pouring over SEC documents filed by the companies, reporter Ryan Flinn found that Pharmasset rejected Gilead's first offer, then went out to see if it could get a bidding war going by contacting four other potential buyers--including one that had already made an overture. By the time the dickering was done, Gilead had raised its offer by 37% and Pharmasset was satisfied that it had the best deal possible.

Gilead's first offer for the company was an even $100 a share, a 56% premium on a stock that had soared as Pharmasset unveiled positive data on its highly promising PSI-7977, writes Flynn. But Pharmasset's board felt that Gilead could do better. They then offered a Gilead an inside look at some of the latest information on their hep C program and Gilead went to $125. Then Pharmasset went looking for other bidders, Gilead went to $135 and closed the deal days later at $137--even though no other offer was put on the table.

Once the two companies closed the deal, of course, there was no end to the second-guessing as analysts pondered why Gilead would pay so much for a company with 82 employees and a track record of solid red ink as it explored a possible interferon-free approach to treating hepatitis C. But if the rest of the biotech industry could learn how to generate the same kind of passion, the potential rewards for investors would be enormous.

- here's the story from Bloomberg

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