Merck to pay $3.85B for maker of hepatitis C medicine

Merck & Co. Inc.'s world headquarters is in Whitehouse Station, N.J. (Mel Evans / Associated Press)
Merck & Co. Inc.'s world headquarters is in Whitehouse Station, N.J. (Mel Evans / Associated Press)
Posted: June 11, 2014

The drugmaker Merck & Co. said Monday that it would buy Idenix Pharmaceuticals Inc. for about $3.85 billion to keep pace in the competitive and lucrative market for medicine to treat hepatitis C, which afflicts about 150 million people worldwide.

Merck will pay $24.50 for each share of Idenix, which closed Friday at $7.23. The large premium reflects Merck's internal reorganization, external views of the market for liver diseases such as hepatitis, and the plans of drug rivals.

Based in Whitehouse Station, N.J., but with a huge operation in Montgomery County, Merck is reorganizing. It is implementing plans for shedding jobs, the last of which was announced in October, and it sold its over-the-counter medicine business to Bayer for $14 billion in March.

Roger Perlmutter was hired in 2013 to both invigorate and narrow the focus of research efforts to areas that might deliver the best results and revenue.

About 3.2 million Americans suffer from chronic hepatitis C, according to the American Liver Association, and millions more patients live overseas, so hepatitis is one area Merck retained. But this area of medicine has changed rapidly in the last few years. In 2011, when Merck launched Victrelis to fight hepatitis C, it was hailed as the first breakthrough in decades. But even that drug still required a long, complicated regimen for patients.

"Idenix's investigational hepatitis C candidates complement our promising therapies in development," Perlmutter said in a statement.

Gilead Sciences, based in California, was the first to market with a single-pill treatment, Sovaldi, that has proven effective. Critics complain that Gilead is charging $1,000 per day or $84,000 for a 12-week treatment plan. But rival drugmakers look at that price with envy, along with the $2.3 billion in first-quarter revenue from sales of Sovaldi.

Merck reportedly had to outbid rivals for Idenix, which is headquartered in Cambridge, Mass., and had 84 employees as of Dec. 31, according to its annual report. The Merck-Idenix deal prompted a surge of interest Monday in Connecticut-based Achillion Pharmaceuticals, another smaller firm involved in hepatitis drug development.

Idenix does not have any products on the market and the compound that most interested Merck is only in the second of two phases of clinical testing. Bernstein Research analyst Tim Anderson said a best-case scenario for getting Food and Drug Administration approval would be 2017.

In a note to clients, Anderson said that acquiring Idenix "makes tactical sense" for Merck, but "whether they paid too much for Idenix will only be knowable at a later date once the data becomes available from phase 3 trials."


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