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Merck agrees $3.85bn deal for hepatitis specialist Idenix

Opens up direct challenge to Gilead
Merck and Co - US headquarters

Merck & Co has dug into its cash reserves to buy Idenix Pharmaceuticals and boost its position in the fast-growing hepatitis C virus (HCV) therapy category.

Merck is already developing a combination of protease inhibitor MK-5172 and NS5A inhibitor MK-8742 for the treatment of chronic hepatitis C, which recently cleared phase III trials and is now starting a series of phase III studies.

Buying Idenix adds NS5A inhibitor samatasvir and - likely more compelling for Merck - nucleotide analogue or 'nuke' IDX21437, which plugs a gap in Merck's near-term HCV portfolio and will slot in alongside its two lead compounds. Both Idenix candidates are in phase II trials.

The first nuke to reach the market was Gilead Sciences' Sovaldi (sofosbuvir), which has seen sales accelerate exponentially since launch to reach a massive $2.3bn in the first quarter of 2014 thanks to pent-up demand and a hefty $84,000 per course price tag.

Idenix believes its candidate has class-leading tolerability and is free of the genetic toxicology, mitochondrial and cardiac safety issues that have affected some other drugs in the nuke class, including Bristol-Myers Squibb's BMS-986094 that was discontinued in 2012.

Nukes are likely to be central to the development of new all-oral cocktails of HCV drugs that are expected to replace therapy with injectable interferon alfa products.

Merck and other rivals, including Johnson & Johnson and AbbVie, as well as BMS and Gilead, are vying to develop regimens that reduce the duration of therapy down below 12 weeks and potentially as short as six to eight weeks.

"Idenix's investigational hepatitis C candidates complement our promising therapies in development," said Merck's R&D chief Roger Perlmutter.

The acquisition "will help advance our work to develop a highly effective, once-daily, all oral, ribavirin-free, pan-genotypic regimen that has a duration of treatment as short as possible for millions of patients in need around the world," he added.

Merck has agreed an all-cash deal of $24.50 a share for Idenix, valuing the company at around $3.85bn, and the two companies expect the transaction to complete in the third quarter of this year.

With over 150 million people worldwide are infected with HCV, the size of the treatment market has been estimated at greater than $200bn, although it remains to be seen how that will be afforded by cash-strapped healthcare systems around the world.

In the near-term, consensus estimates are that annual HCV global sales will reach between $15bn and $20bn sometime in 2016-2018.

Article by
Phil Taylor

10th June 2014

From: Research

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