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Nov 21, 2011

Gilead Ponies Up $11B to Purchase Pharmasset

  • Gilead Sciences plans on taking over Pharmasset in a deal that values the latter company at about $11 billion. The deal adds oral HCV treatments to Gilead's existing programs. Gilead will commence a tender offer to acquire all of the outstanding shares of Pharmasset's common stock at a price of $137 per share in cash. The purchase price represents an 89% premium to Pharmasset's closing share price on Friday.

    "The acquisition of Pharmasset represents an important and exciting opportunity to accelerate Gilead's effort to change the treatment paradigm for HCV-infected patients by developing all-oral regimens for the treatment of the disease regardless of viral genotype," comments John C. Martin, Ph.D., chairman and CEO of Gilead.

    Gilead plans to finance the transaction with cash on hand, bank debt, and senior unsecured notes. The company expects the transaction, when completed, to be dilutive to Gilead's earnings through 2014 and accretive in 2015 and beyond.

    Pharmasset currently has three clinical-stage treatments for chronic hepatitis C virus (HCV). Lead candidate PSI-7977, a uracil nucleotide analog, has recently been advanced into two Phase III studies in genotype 2 and 3 patients. Both studies will utilize 12 weeks of treatment with PSI-7977 in combination with ribavirin.

    One study will compare this all-oral regimen against 24 weeks of the standard-of-care pegylated interferon/ribavirin in treatment-naïve patients. The second study will compare the all-oral regimen to placebo in interferon-intolerant/ineligible patients.

    A third Phase III trial in genotype 1 patients will be initiated in the second half of 2012. The design of this study is dependent on the outcome of Phase II studies that are evaluating PSI-7977 in various combinations in genotype 1-infected patients. If successful, this strategy could lead to an initial U.S. regulatory approval of PSI-7977 in 2014.

    PSI-938, a guanosine nucleotide analog, is being tested in a Phase IIb interferon-free trial as a monotherapy and in combination with PSI-7977 in subjects with HCV of all viral genotypes. Mericitabine, a cytidine nucleoside analog, is partnered with Roche and is being evaluated in three Phase IIb trials. Roche is responsible for all aspects of the development of mericitabine.

    "Pharmasset presented compelling Phase II data earlier this month further characterizing the strong efficacy and safety profile of PSI-7977," says Dr. Martin. “The compound, together with Pharmasset's other pipeline candidates, represents a strong strategic fit with Gilead's vision, pipeline, and capabilities. This transaction will serve to drive the long-term growth of our business, and we look forward to working closely with the Pharmasset team to advance a broad clinical program in HCV to address the unmet needs of patients and the medical community."

    Gilead's R&D pipeline includes seven unique molecules in various stages of clinical development for the treatment of HCV. Three separate all-oral Phase II studies are currently ongoing, and Gilead expects clinical data from these studies to become available in 2012 and early 2013.


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