(Adds comments from Merck research chief, analysts, details on
By Ransdell Pierson
June 9 Merck & Co Inc said Monday it
would buy Idenix Pharmaceuticals Inc for $3.85 billion
and plans to combine the two companies' most promising drugs to
produce a faster, more effective cure for hepatitis C.
Merck said it would pay $24.50 per share, more than three
times Idenix's Friday closing price of $7.23.
The payoff for Merck could come from a triple therapy that
may cure patients with all genotypes, or strains, of the
hepatitis C virus in as little as four to six weeks, its
research chief, Roger Perlmutter, said in an interview.
"An ideal therapy means something that works in every
hepatitis C-infected patient, irrespective of which genotype,"
Perlmutter said. "Our goal is to cure everyone quickly using an
The deal comes as drugmakers aim to better compete with
Gilead Sciences Inc's Sovaldi, an $84,000 treatment
approved in December that generated an unprecedented $2.3
billion in sales in the first few months on the market.
The cost of Sovaldi, which cures well in excess of 90
percent of patients in as little as 8 weeks of treatment, has
drawn sharp criticism from insurers and government officials.
Idenix has three drugs in development to treat hepatitis C,
most notably a pill in early-stage trials called IDX21437. Like
Sovaldi, it is a nucleotide inhibitor - or "nuc" - that blocks a
protein needed by the hepatitis C virus to replicate.
Merck hopes to combine IDX21437 with its two high-profile
experimental oral treatments, a protease inhibitor called
MK-5172 and a so-called NS5A inhibitor called MK-8742 that
together received a "breakthrough therapy" designation from the
U.S. Food and Drug Administration.
In a recent mid-stage trial, Merck's two-drug combo cured 98
percent of previously untreated patients with genotype 1, the
most common and hardest to treat variant of hepatitis C.
The Idenix drug in earlier studies has shown effectiveness
against all six main genotypes of hepatitis C, without raising
serious safety concerns that have dogged other drugs in its
class. Bristol Myers paid $2.5 billion for Inhibitex to get its
nuc, but scrapped the drug in 2012 after serious side effects
were seen in trials.
Hepatitis C drugs have a history of being expensive, largely
because some 170 million people worldwide have the often-fatal
liver disease and have not had good treatment options.
Bristol paid a 163 percent premium for Inhibitex. Gilead
acquired Sovaldi by agreeing in 2011 to pay $11 billion in cash
for biotech company Pharmasset, an 89 percent premium for a
company with no marketed products.
Perlmutter said Merck hopes the triple combination will cure
patients in 4 to 6 weeks, substantially more quickly than
current treatments and those in clinical trials.
LARGER MARKET OPPORTUNITY
Leerink Partners analyst Seamus Fernandez said IDX21437 has
not shown any of the skeletal or cardiac toxicity signals that
were seen with Bristol's failed drug. Moreover, he said safety
of the Idenix drug, at least from preclinical studies, looks
very similar to Sovaldi.
"Merck's presentation supports a much larger and longer
market opportunity in hepatitis C" than expected, justifying the
price of the deal, Baird Equity Research analyst Brian Skorney
said in a research note.
Merck and Cambridge, Massachusetts-based Idenix said they
expected the transaction to close in the third quarter.
Idenix said in March it was involved in a patent dispute
with Gilead related to its hepatitis C treatment in Oslo,
Credit Suisse acted as the financial adviser to Merck, while
Hughes Hubbard & Reed LLP was its legal adviser.
Centerview Partners was Idenix's financial adviser and
Sullivan & Cromwell acted as its legal adviser.
Idenix's shares soared 232 percent to $24.03 on Monday.
Shares of Achillion Pharmaceuticals, another maker of
hepatitis C drugs, jumped 42 percent. Merck's shares were down
(Additional reporting by Natalie Grover in Bangalore and Bill
Berkrot in New York; Editing by Maju Samuel, Kirti Pandey and