This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Hep C Takeover Speculation Rains Down on Idenix and Achillion

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

SAN FRANCISCO ( TheStreet) -- Three independent hepatitis C drug developers bought, two more -- Idenix Pharmaceuticals (IDIX) and Achillion Pharmaceuticals (ACHN - Get Report) -- waiting at the altar.

Bristol-Myers Squibb (BMY - Get Report) snatches up Inhibitex (INHX) for $2.5 billion in a deal announced Saturday night as the entire biopharmaceutical industry travels here for the start of the J.P. Morgan Healthcare Conference on Monday morning. [Is there any better way to kick off a closely watched investor confab like this than a blockbuster buyout? I think not.]

Gilead Sciences (GILD - Get Report) is expected to close on its $11 billion acquisition of Pharmasset (VRUS) this week or no later than before the end of the month.

It seems teeny by comparison, but let's not forget that Roche (RHHBY) bought Anadys Pharmaceuticals for $230 million in October.

All three buyouts were done to achieve the same goal: Develop the next generation of highly potent hepatitis C therapies composed entirely of pills so patients no longer need to endure weekly shots of interferon. The prize for the companies that can cobble together the two or three drugs (perhaps just one) necessary to create this all-oral regimen is about $10 billion or more in expected future hepatitis C revenue.

The pace of hepatitis C deal activity is breathtaking if not unprecedented. Takeover speculation will certainly rain down Monday on Idenix and Achillion given their status as the last two independent Hep C drug developers.

Idenix's lead drug, IDX184, belongs to the same "nucleoside" or "nuc" class of oral Hep C drugs as Pharmasset's PSI-7977 and Inhibitex's INX-189.

The Food and Drug Administration has a partial clinical hold on IDX184 due to liver toxicity that cropped up in a study that combined '184 with another Idenix Hep C drug known as IDX320. Idenix believes this safety signal was caused by '320, and development of that drug was shelved.

To remove '184 from the Hep C safety doghouse and clear it for future combination studies, Idenix is conducting a short phase IIb study with interim data expected imminently, perhaps even this week. If the safety profile of '184 comes back clean, the FDA should be persuaded to lift the partial clinical hold and potential suitors may move quickly to snatch up Idenix.

Idenix executives will be presenting at the J.P. Morgan conference on Wednesday at 5 p.m. EST.

Achillion expects to release proof-of-concept data from studies of three experimental hepatitis C drugs -- ACH-1625, ACH-2684 and ACH-2928 -- in the first half of the year. ACH-1625 is a once-daily protease inhibitor (the same Hep C drug class as Vertex Pharma's Incivek and Merck's Victrelis) that is being combined with interferon and ribavirin.

Achillion is not scheduled to present at the J.P. Morgan conference this week, but the company's CEO Michael Kishbauch has not been shy about letting investors (and potential suitors) know that his company is for sale.

Additional thoughts and questions on the rapidly evolving (and consolidating) hepatitis C drug landscape:

Who are the potential buyers still out there? Merck (MRK - Get Report) , Johnson & Johnson (JNJ) and Abbott (ABT) are all invested heavily in hepatitis C drug development already, so each could step up as potential acquirers. Merck may have the most to lose because its approved Hep C drugs PEG-Intron and Victrelis are threatened by the push to develop new all-oral therapies.

This is actually the second time that Bristol-Myers has made a hepatitis-related deal in the midst of the J.P. Morgan Healthcare Conference. In January 2009, Bristol licensed a long-acting interferon from Zymogenetics. In September 2010, Bristol bought Zymogenetics for $885 million. The payoff on this deal now has to be questioned given the drive to do away with long-acting interferons in hepatitis C in favor of developing all-oral regimens.

How many, if any, of these experimental oral Hep C drugs will ultimately fail clinical trials or be shelved due to safety problems? It's hard to believe that all will ultimately be successful, given the typical failure rate seen in drug development.

What happens if either Idenix or Achillion are not acquired? Can these small companies survive on their own? If Hep C turns out to be anything like HIV, the answer is no.

Inhibitex shares have been very volatile recently due to worries about the safety of INX-189. It's not known whether Bristol is protecting itself with an exit clause in its tender offer if INX-189 does run into safety issues.

-- Written by Adam Feuerstein.

>To contact the writer of this article, click here: Adam Feuerstein.

>To follow the writer on Twitter, go to

>To submit a news tip, send an email to:

Follow TheStreet on Twitter and become a fan on Facebook.
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ACHN $7.57 -1.30%
BMY $61.44 1.54%
GILD $100.65 -0.16%
IDIX $24.50 0.20%
MRK $50.95 -0.14%


Chart of I:DJI
DOW 17,084.49 +33.74 0.20%
S&P 500 2,013.43 +15.91 0.80%
NASDAQ 4,830.47 +19.6820 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs