Idenix Pharmaceuticals, Inc.
) skyrocketed 229.05% on news that the company will be acquired by
). Merck's offer price of $24.50 per share in cash was more than
three times the company's share price before the offer was
announced. The acquisition, slated to close in the third quarter,
is valued at about $3.85 billion.
With the Idenix acquisition, Merck is looking to boost its
hepatitis C virus (HCV) portfolio. Merck has a presence in the HCV
market in the form of Victrelis and has three HCV candidates in its
pipeline. Merck's lead HCV program is a combination of MK-5172
(NS3/4A protease inhibitor) and MK-8742 (NS5A replication complex
inhibitor) currently in phase III studies. This combination has
Breakthrough Therapy designation in the U.S.
Idenix will bring with it three HCV candidates - IDX21437
(proof-of-concept done with phase II scheduled to commence
shortly), IDX21459 (phase I ongoing outside the U.S.) and
samatasvir (phase II to commence shortly). While samatasvir is a
NS5A inhibitor, the other two are nucleotide (nuke) prodrugs.
The goal is to bring a once-daily, all oral, ribavirin-free,
pan-genotypic regimen that is highly effective and involves shorter
This deal is in line with Merck's efforts to expand its pipeline
and focus on its core areas of expertise. Although the price looks
a bit high (especially considering the candidates are still
early-stage and years away from commercialization), the successful
development and approval of the Idenix candidates would allow Merck
to generate a decent return given the high and growing demand for
better HCV treatments. The addition of nukes to Merck's pipeline is
a plus for the company's HCV portfolio.
The HCV market has always been viewed as highly lucrative.
) Sovaldi has been bringing in billions of dollars within a few
months of its approval despite concerns regarding its high price.
Plus there is space in the market for additional treatments.
Several companies have been working on developing the next
generation of HCV treatments. In addition to Merck and Gilead,
Achillion Pharmaceuticals, Inc.
) are also developing HCV candidates. In fact, Achillion Pharma's
shares shot up 47.57% on the Idenix - Merck acquisition news
reflecting expectations that Achillion Pharma too is a potential
Both Merck and Idenix are Zacks Rank #3 (Hold) stocks. Gilead is
a better-ranked stock with a Zacks Rank #1 (Strong Buy).
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