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Idenix Leads Hepatitis Drug Developers Higher on Inhibitex
  (Updates with comments from Novartis in sixth paragraph.)

Jan. 9 (Bloomberg) -- Idenix Pharmaceuticals Inc. and Achillion Pharmaceuticals Inc., developers of hepatitis C drugs, rose on speculation they may follow Inhibitex Inc. and Pharmasset Inc. as acquisition targets.

The companies are testing experimental medicines that may enter a developing $20 billion market for hepatitis C treatments that are easier to use and more effective than existing products. Idenix, of Cambridge, Massachusetts, and New Haven, Connecticut-based Achillion both reported positive results today on their drugs in the second phase of testing normally needed for U.S. approval.

Bristol-Myers Squibb Co. said on Jan. 7 it would pay about $2.5 billion in cash to buy Inhibitex. Pharmasset agreed to be acquired by Gilead Sciences Inc. for $10.8 billion in a deal announced Nov. 21. Idenix rose 31 percent to $9.25 at 12:01 p.m. New York time and Achillion gained 15 percent to $9.12.

"We expect continued consolidation in the HCV space with Achillion as a potential target," said Edward Tenthoff, an analyst with Piper Jaffray Cos., a note to clients.

Vertex Pharmaceuticals Inc., Merck & Co., Johnson & Johnson, Boehringer Ingelheim GmbH, Abbott Laboratories, Pfizer Inc. and Novartis AG are all potential buyers, Tenthoff said.

Novartis has been looking at potential hepatitis C targets, CEO Joseph Jimenez Jr. said at the J.P. Morgan Healthcare Conference in San Francisco. Jimenez said he was "amazed at prices" for the companies and wasn't willing to pay that much. The company may partner to develop new drugs, instead, he said.

Spokesmen for Roche, Abbott, and Boehringer Ingelheim declined to comment.

Idenix Drug

As many as 170 million people worldwide carry the hepatitis C virus, and current drugs, given through injection, can have side effects that make therapy difficult to endure. The new medicines are designed to be taken as pills, with a higher cure rate and fewer side effects.

Idenix reported today in a statement that its lead drug candidate for the virus, IDX184, showed no serious adverse events in patients after 28 days of treatment. The trial is in the second phase of testing normally required for U.S. regulatory approval.

Ronald Renaud, Idenix's CEO, wouldn't comment specifically on any possible acquisition of the company.

"It's a very fast moving space," Renaud said in a telephone interview. "There's a lot of jockeying that's going on right now so folks can be well-positioned in the not-too- distant future," he said.

Trial Restrictions

Renaud said the company had submitted the data to the FDA and expects to hear whether restrictions on its trials are lifted within a month. Idenix's study had been partly halted by the agency over safety issues.

Interim results from a phase 2 study of Achillion's experimental once-daily treatment for hepatitis C patients found that the virus was undetectable in all patients with genotype 1 of the disease, the most common in North America, South America, and Europe.

Chief Executive Officer Michael Kishbauch of Achillion said in November his company is in talks with potential partners and acquirers.

Glenn Schulman, a spokesman for Achillion, said he didn't have further comment when reached today. "Right now we're focused on advancing our pipeline," he said in a telephone interview.

Other drugmakers that may look to expand in the market for hepatitis C treatments include Roche Holding AG, Brian Skorney, a New York-based analyst at Brean Murray Carret & Co., said in a telephone interview in November, after the Gilead agreement was announced.

Won Approval

Merck and Vertex last year won approval for the first new therapies for hepatitis C in almost a decade. A third, smaller deal was announced in October when Roche, based in Basel, Switzerland, agreed to buy Anadys Pharmaceuticals Inc., another maker of experimental medicines for hepatitis C, for about $230 million.

Bristol-Myers, based in New York, agreed to purchase Inhibitex at $26 a share, a price that more than doubles the Alpharetta, Georgia-based biotechnology company's $9.87 closing price on Jan. 6. The transaction is expected to dilute earnings for Bristol-Myers through 2016, with an impact of about 4 cents per share in 2012 and 5 cents per share in 2013, according to the statement.

Premium Paid

The premium paid by Bristol-Myers, of about 126 percent of Inhibitex's price over the previous 20 trading days, ranks as the second-largest on record for a biotechnology or pharmaceutical company worth more than $500 million, according to data compiled by Bloomberg since 1999. The record is Genzyme Corp.'s 2006 deal for AnorMed Inc. with a 162 percent premium.

"The world is moving toward an all-oral regimen for hepatitis C, and Bristol-Myers, which is strong in antivirals, seems like it wants to be a part of that," Les Funtleyder, a health-care strategist and portfolio manager with Miller Tabak & Co. in New York, wrote in an e-mail yesterday.

Inhibitex's INX-189 is in the second stage of testing normally needed for U.S. regulatory approval. Pharmasset's PSI- 7977 is in the third and final phase, and could generate $3 billion to $5 billion in revenue for Foster City, California- based Gilead, Michael Yee, an analyst with RBC Capital Markets in San Francisco, estimated in November.

The market for medicines that work against the virus is about $3 billion worldwide, according to Andrew Berens, a senior health-care analyst with Bloomberg Industries, in Skillman, New Jersey. It may be worth $20 billion by 2020, said Michael Kishbauch, chief executive officer of Achillion Pharmaceuticals Inc., in a November interview.

--With assistance from Elizabeth Lopatto in New York and Albertina Torsoli in San Francisco. Editors: Andrew Pollack, Angela Zimm


Hepatitis C Drug Developers Shares Soar After Bristol Deal

--Shares of two players developing hepatitis C treatments jump after news of peer being acquired

--Bristol-Myers is paying a 163% premium to acquire Inhibitex

--Analysts say significant interest remains for hepatitis C-focused biotech companies

By John Kell


NEW YORK -(Dow Jones)- Shares of hepatitis C drug developers Idenix Pharmaceuticals Inc. (IDIX) and Achillion Pharmaceuticals Inc. (ACHN) jumped sharply after Bristol-Myers Squibb Co. (BMY) over the weekend agreed to pay a high premium to acquire another player in the category.

Drug maker Bristol-Myers agreed to pay $26 a share, or about $2.5 billion, to acquire Inhibitex Inc. (INHX), paying a 163% premium to become a bigger player in the growing business of treating the potentially fatal virus. The bid came as companies race to develop, or acquire, more-effective drugs that can be taken for shorter periods with fewer side effects.

The deal raised interest in other players developing hepatitis C treatments: Shares of Idenix jumped 35% to $9.51 in recent trading, and Achillion's stock rose 11% to $8.79. It was the highest level both stocks have traded at since 2007.

Analysts say the news should bring significant merger-and-acquisition interest for remaining innovative hepatitis C-focused biotech companies, most notably Idenix and Achillion.

Leerink Swann Research said that while Bristol-Myers's takeover of Inhibitex is less than the $11 billion valuation of Pharmasset Inc. (VRUS), which Gilead Sciences Inc. (GILD) agreed to acquire in November, "it's still likely unprecedented for an early Phase II asset." The firm said the Bristol-Myers deal leaves Idenix and Achillion as the only acquirable assets in their respective classes.

Idenix's market capitalization is roughly $918 million, while Achillion's is $ 614 million.

Idenix earlier Monday also disclosed positive interim data from a clinical trial of its lead hepatitis C drug candidate and said it is advancing its hepatitis C development pipeline. Idenix says more than an estimated 170 million people worldwide are chronically infected with hepatitis C.

Under a development and commercialization agreement with Novartis AG (NVS, NOVN.VX) signed in May 2003, Idenix launched hepatitis B drug candidate telbivudine, which is sold on the market as Tyzeka/Sebivo. Idenix has three other treatments in the pipeline, as well as additional nucleotide inhibitors.

Achillion--which has five hepatitis C treatments in development, including one compound in Phase 2--on Monday said the 12-week treatment of ACH-1625 was safe and well tolerated. The company said it now plans to research the Phase 2 treatment in combination with other oral antiviral agents for the treatment of all hepatitis C genotypes.

Not all analysts were buying into the rally. Brean Murray Carret & Co. analyst Brian Skorney wrote in a note that Idenix's effort in the space "will ultimately yield results that do not match what we have become accustomed to" from others. Skorney affirmed his sell rating and $3 price target on the stock.

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