Merck & Co. expands in hepatitis C with deal to buy Idenix for $3.85 billion

Merck & Co. announced Monday a definitive agreement to acquire Idenix Pharmaceuticals for $24.50 per share in cash, or approximately $3.85 billion, boosting its pipeline of hepatitis C drugs. The companies noted that the transaction, which represents a premium of more than triple Idenix's closing share price on June 6, has been approved by both boards of directors and is expected to close in the third quarter.

Jason Kolbert of Maxim Group commented "it's a very fair premium," adding "the big pharma companies understand that the prevalence of people with Hep-C is so big that the market is going to be around for the next 10 years."

Roger Perlmutter, president of Merck Research Laboratories, remarked "Idenix has established a promising portfolio of hepatitis C candidates," adding that the compounds "complement our promising therapies in development and will help advance our work to develop a highly effective, once-daily, all oral, ribavirin-free, pan-genotypic regimen." Perlmutter suggested that "the future" in HCV treatment lies in triple drug combinations, commenting "we're looking to bring this to patients around the world to ultimately cure hepatitis C virus infection in everyone."

According to Perlmutter, Idenix initiated talks with Merck after being approached by another company about a possible deal, triggering a sale process. "We've been talking with Idenix for a long time, and have a long history in this field," Perlmutter said.

Merck noted that Idenix currently has three HCV drug candidates in clinical development, including the two nucleotide prodrugs IDX21437 and IDX21459, along with the NS5A inhibitor samatasvir. Meanwhile, Merck is developing the NS3/4A protease inhibitor MK-5172 and the NS5A replication complex inhibitor MK-8742. In April, the company announced the initiation of Phase III studies for the combination of MK-5172 and MK-8742, which has received FDA breakthrough therapy status, with and without ribavirin in various genotypes and across a broad range of patient populations with chronic HCV.

Idenix's lead drug IDX21437, which works similarly to Gilead Science's Sovaldi (sofosbuvir), gained FDA approval last year and clearance from European regulators in January. Sovaldi generated $2.3 billion in revenue for the first quarter, topping analyst expectations of $1.1 billion. ISI Group analyst Mark Schoenebaum remarked that similar drugs "are scarce and thus perhaps quite valuable."

In June last year, Idenix said that clinical trials of its experimental HCV drug IDX20963 would be delayed after the FDA requested further preclinical safety information on the experimental uridine nucleotide prodrug. Earlier in 2013, the drugmaker terminated development of the nucleotide polymerase inhibitors IDX184 and IDX19368 for HCV after the FDA placed the programmes on clinical hold.

Kolbert suggested that Achillion Pharmaceuticals is now one of the only remaining "pure play companies" developing treatments for HCV. "If Merck can acquire Idenix at such a huge premium, there's still a huge premium to be enjoyed for Achillion," Kolbert added.

For more information on the HCV market, see KOL Insight - Hepatitis C: Game changing regimens to revolutionise treatment landscape.

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