OraSure HCV test gets FDA nod for promotional expansion...

OraSure's HCV test gets a boost thanks to an FDA nod to expand the promotion and use of the test, which will be co-marketed by Merck. The test is said to be able to determine HCV positivity within 20 minutes. The approval should also be a boon to both Merck, Vertex and near-term HCV DAA developers as this is an opportunity to expand the pool of treatable patients

OraSure gets wider use for hep C test, shares up

* Test can check for hepatitis C virus in 20 minutes

* OraSure shares up 8.8 percent

Nov 29 (Reuters) - OraSure Technologies received approval to sell its test for the hepatitis C virus to a wider range of clinics and doctors' offices in the United States, sending shares of the company up nearly 9 percent.

The company said on Tuesday the Food and Drug Administration expanded approval for the OraQuick HCV test, allowing more than 180,000 facilities to use it for detecting the serious liver disease in patients.

The FDA approved the test in February, but initially limited its use to clinically trained staff.

The test for the virus can be done via blood samples taken from a vein, or with a finger-stick test, which draws a tiny amount of blood by pricking the finger.

OraSure, based in Bethlehem, Pennsylvania, said patients can get a diagnosis in 20 minutes.

About 4 million people in the United States, and 180 million worldwide, are infected with the hepatitis C virus, the company said. Untreated, hepatitis C can lead to chronic liver disease, liver cancer and the need for a liver transplant.

Infections with the hepatitis C virus are not generally obvious. In most cases there may be no symptoms for years while the hepatitis quietly damages the liver until it is finally diagnosed.

"New therapies are now available that can effectively treat a high percentage of people with HCV infection, making expanded and accessible testing for HCV a critical step in fighting this epidemic," Dr. Willis Maddrey, president of the Chronic Liver Disease Foundation said in a statement provided by OraSure.

Vertex Pharmaceuticals and Merck & Co both received approval to market new hepatitis C drugs earlier this year. The market for such drugs is estimated to be worth about $15 billion by 2019, and both companies are conducting campaigns to raise awareness of the disease.

An increase in hepatitis C testing should help boost sales of the new medicines.

Merck will help promote the OraQuick HCV test in doctors' offices as part of a collaboration agreement, OraSure said.

OraSure shares closed up 69 cents, or 8.8 percent, to $8.55 on Nasdaq.

Seeking Alpha.com's Chris Katje on Gilead potential for antiviral dominance...

A bullish outlook for Gilead from Seeking Alpha author Chris Katje. His view is that Gilead will have market dominance in both HIV and HCV. He sees that Gilead will have full control of the Pharmasset HCV portfolio through the buyout, thus negating any worry about royalty payments. I'd also add the potential for co-formulation between Pharmasset's portfolio and Gilead's current HCV portfolio, which has always been Gilead's hallmark. An interesting read and it seems the rest of the market seems to agree with Katje, as Gilead stock has received several outlook upgrades from analysts. It just took some time for the initial sticker shock to wear off.

Acquisition of Pharmasset

Gilead Sciences (GILD) announced its intent to acquire Pharmasset (VRUS) for a whopping $11 billion on Monday morning. The deal has led many analysts and investors to question if Gilead overpaid for the deal. I think the deal is a great long-term play for the company and actually could present a buying opportunity of shares, which were down sharply after the announcement. Shares were up around five percent the following day after the announcement. Gilead will now be a large player in the HIV and Hepatitis markets.

Pharmasset has no drugs on the market, which is the biggest reason why people question the valuation. Drug candidate PSI-7977 appears to show enough promise that other companies were nibbling at acquiring the company. Gilead is confident in its acquisition and is funding the deal through cash and $6 billion in debt it is taking on. Hepatitis C is being targeted by this drug and it could actually save many Americans from the life threatening liver damage that is usually caused by the disease and leads to many liver transplants. The drug is expected to be filed with the Food and Drug Administration in 2014. Pharmasset owned the worldwide rights to the drug so Gilead will take full control and will not have to worry about licensing or royalty payments. Gilead now will be the leader in the race to find an all oral drug for the treatment of Hepatitis C.

Why the Acquisition and Hefty Premium

Gilead presented a slide show on its website shortly after the announcement to acquire Pharmasset. Gilead reconfirmed its goal of creating the best Hepatitis C drug, which would be determined by some of the following:

Taken Once Daily
Manageable Side Effects
Higher Cure Rates Than Current Drugs on the Market
Increased Treatments With a New Drug

Gilead has recognized that a combination of two or more drugs may be needed to create this super Hepatitis C drug. This is where I believe that Gilead’s acquisition will ultimately pay off. Gilead has combined several of its own drugs with products of other companies to create better acting and more effective drugs for patients.

Competition in Hepatitis C Market

Several other Hepatitis C drugs have popped up on the market recently. Victrelis is a drug owned by Merck (MRK), acquired through its acquisition of Schering Plough. The drug has so far been a disappointment as it only brought in $31 million of revenue in the third quarter reported on October 31, for Merck. Incivek, a drug owned by Vertex Pharmaceuticals (VRTX), on the other hand posted sales of $419 million in the past quarter. Analysts have already been lowering price targets of VRTX because of the likely competition from PS-7977 pending approval. Vertex will enjoy a couple of years of dominating market share before the competing drug enters the market. Annual sales could hit $2 to $3 billion for Vertex. Merck on the other hand is playing second fiddle and is likely to never see blockbuster status with its Hepatitis C drug.

Gilead’s Biggest Acquisitions

Gilead has a long history of acquiring other drug companies as many large drug companies do. Highlights include:

1999 Nexstar Pharmaceuticals - Gained two drugs through the acquisition. One, Ambisome, is still a marketed drug by Gilead. Deal seemed to be made more for the company’s intent on expanding in Europe.

2003 Triangle Pharmaceuticals - Emtriva, now a part of two Gilead drugs, was gained through this $464 million acquisition. Atripla and Truvada both use the component emtricitabine, a former Triangle product.

2006 Corrus Pharma - Has a current drug in Gilead’s pipeline aimed at treating Cystic Fibrosis.

2006 Myogen - Myogen was the most expensive acquisition previous to Pharmasset coming in at $2.5 billion. This has also been one of the most important and successful acquisitions made by Gilead as it brought three drugs, two marketed, and one currently sold by Gilead to the company.

2009 CV Therapeutics - Billion dollar purchase helped strengthen and diversify Gilead’s pool of drugs as it gained two drugs aimed at cardiovascular diseases.

Several other million dollar deals were made by Gilead over the last eight years. Gilead has made many of its acquisitions to strengthen its own technology and combine existing drugs with new ones.

Gilead’s Products

Gilead remains the market leader in drugs that treat the HIV virus. Its marketed products in the HIV market are:

Atripla is marketed with Bristol Myers Squibb (BMY) after its approval in 2006. The drug treats HIV and will lose patent expiration in 2021.

Complera is one of Gilead’s newest drugs on the market. It was approved by the FDA in August of 2011, and is co-marketed with Johnson and Johnson (JNJ).

Emtriva was approved in 2003 and will expire in 2021.

Truvada treats HIV and is one of Gilead’s top selling drugs. It was approved in 2004 and will lose its patent protection in 2021.

Viread treats Hepatitis B and HIV viruses. The drug was the first successfully launched HIV drug in 2001 by Gilead. The drug, which is a huge seller for Gilead, will lose patent protection in 2017.

Gilead has drugs in several other fields that compete with numerous other large drug companies. The other drugs currently on the market are:

Ambisome treats infections like fungal, meningitis, and Cryptococcus. The drug was approved in 1997 and will lose patent protection in 2016. The marketing partner on the drug is Astellas Pharma.

Cayston is Gilead’s cystic fibrosis drug that was approved in 2010. The drug has exclusive patent protection until 2021. Gilead markets the drug on its own and maintains all revenue from the drug.

Hepsera treats Hepatitis B and is owned and marketed by Gilead. The drug was approved in 2002 and its patent expires in 2014.

Letairis has since 2007 treated Pulmonary Hypertension. The drug is co-marketed with GlasxoSmithKline (GSK) and loses patent protection in 2015.

Lexiscan is a cardiovascular drug marketed with Astellas Pharma and it will lose patent protection in 2019.

Macugen is an age-related macular degeneration drug first approved in 2004, which is shared with Pfizer (PFE) and will lose patent protection in 2017.

Ranexa treats chest pain and will lose patent protection in 2019. The drug is co-marketed with Swiss drug company Roche.

Tamiflu treats the influenza virus as an oral capsule. The drug, which loses its patent protection in 2016, is licensed to Roche.

Vistide treats Cytomegalovirus and also certain eye problems involving the retina. The drug was founded in 1996 and has since lost its patent protection.

Gilead’s Pipeline

Gilead has twenty drugs listed on its site in current phases of trial. The drugs target HIV, Hepatitis C, numerous Cardiovascular diseases, Diabetes, Leukemia, Non-Hodgkin’s Lymphoma, and other diseases. Like many other large drug companies, Gilead has kept a strong pipeline targeting some of the biggest diseases affecting the world today. Three drugs targeting HIV are in Phase III trials currently. The Pharmasset acquisition will improve the company’s pipeline as it focuses on becoming a large player in the Hepatitis C market. Gilead will likely test several of its own Hepatitis drugs with Pharmasset products to create dual drugs much like it has with its HIV drugs.

The most important drug for Gilead in my opinion is known as the Quad. The drug combines Gilead’s own products and will help cut part of its revenue share with other marketing partners. The drug has held up well in trials. The drug will be brought in front of the FDA in 2012 and could be a substantial revenue earner for Gilead. The Quad drug is cutting down on symptoms from Gilead’s Atripla including dizziness, insomnia and depression. There are two trials testing Gilead drugs together in the Quad trials. Atripla had sales of $2.9 billion over the last year. However a portion of that revenue is given to Bristol Myers Squibb for its contribution to the drug. The approval of the quad pill could provide a nice bump to the share price in 2012.

Gilead’s Current Sales

Gilead is the leader in the HIV drug market and has shown its dominance. From the slide show presentation after the Pharmasset announcement it listed trailing twelve month revenue at $7.4 billion. The total market for HIV drugs is currently $13 billion so Gilead controls 50% of this blockbuster medical category. In the last fiscal year Gilead had earnings per share of $3.32 based on earnings of $2.9 billion.

Analysts call for earnings of $4.37 for the next fiscal year. With a closing share price of $39.28 on Friday, the price-to-earnings ratio is less than nine. According to Yahoo Finance, over 91% of the shares are currently held by institutions and mutual funds. More than 900 funds hold shares of Gilead as it represents one of the best plays on the healthcare and drugs industry.

Analyst Upgrades

Several days after the acquisition of Pharmasset was announced, analysts have upgraded shares. Citigroup and Bank of America both upgraded the shares after revaluating. Bank of America said that the company’s Hepatitis C program could some day be worth $15 to $30 billion. Gilead currently has a market capitalization of just under $30 billion so this deal could clearly define the company for the future.

My Share Valuation

I think the buyout of Pharmasset is a great purchase for Gilead. Gilead has made great use of drugs acquired through pipelines of companies it has bought out. Gilead absolutely owns the HIV drug market and the deal should help insure it gets a large portion of the Hepatitis C drug market in the future as well. For the coming year shares should trade closer to 12 times earnings, which would represent a share price of $52.44. The approval of the Quad drug as well as earnings announcements could power shares past $60. I think long term the company could double its market capitalization to $60 billion with its marketed HIV drugs and several Hepatitis C drugs on the market. I think shares would be a great purchase for an IRA as a bet on the company for the future.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GILD over the next 72 hours.

Hep C Protease Inhibitors May Not Be Cost-Effective For Some First-Time Treatment Takers

From http://www.hepmag.com, a synopsis of an AASLD study authored byZiad Gellad, MD, MPH, of Duke University Medical Center that argues triple therapy may not be the most cost-effective stragtegy for genotype 1 patients with the IL-28B CC genotype. As we know, patients with the CC genotype are more likely to respond to peg-interferon and ribavirin alone, at a significant cost savings compared to starting these patients on a HCV protease inhibitor. According to Gellad, " for first-time treatment takers with the IL-28B CC genotype, adding Incivek “is unlikely to be cost-effective under current cost and efficacy conditions”

Hepatitis C virus (HCV) protease inhibitors are not cost-effective for first-time treatment takers with HCV genotype 1 and the IL-28B CC genotype, according to analysis conducted by Ziad Gellad, MD, MPH, of Duke University Medical Center in Durham, North Carolina, and his colleagues. They reported their findings on Monday, November 7, at the 62nd annual meeting of the American Association for the Study of Liver Diseases (AASLD) in San Francisco. According to the study authors, people with the IL-28B CC genotype are more likely to be cured with pegylated interferon and ribavirin alone than people with the IL-28B CT or TT genotypes, for whom the addition of either Incivek (telaprevir) or Victrelis (boceprevir) may be more cost effective.

A 24- to 48-week course of pegylated interferon and ribavirin ranges from $18,000 to $30,000. As Gellad noted, “adding Incivek (telaprevir) or Victrelis (boceprevir)”—both recently approved HCV protease inhibitors—“more than doubles the cost of therapy, to a range of $48,000 to $85,000.”

An advantage of Incivek and Victrelis is that they can improve the effectiveness of treatment when added to a combination of pegylated interferon and ribavirin. This is particularly true for people with the IL-28B CT or TT genotype, which is believed to reduce the effectiveness of pegylated interferon, which remains a backbone of hepatitis C treatment. Conversely, those with the IL-28B CC genotype are much more likely to respond effectively to pegylated interferon-ribavirin therapy. Thus, it remains unclear if adding either Incivek or Victrelis to pegylated interferon/ribavirin—provided that the patient has an IL-28B CC genotype and is starting therapy for the first time—translates into added effectiveness worth the additional cost of either drug.

The authors created a model that allowed them to analyze three HCV treatment strategies. The first strategy involved 48 weeks of treatment with pegylated interferon plus ribavirin. The second strategy involved 24 weeks of pegylated interferon and ribavirin according to response-guided therapy (RGT) rules, which take into consideration viral load measurements at weeks four and 12 of treatment. The third strategy involved 12 weeks of Incivek in combination with either 24 or 38 weeks of pegylated interferon plus ribavirin.

According to the analysis by Gellad’s team, the cure rates among first-time treatment takers with the CC genotype were similar, yet the costs of each regimen varied considerable. Among those who qualified for 24 weeks of RGT with pegylated interferon and ribavirin alone, the cure rate was expected to be roughly 71 percent at a cost of $46,785. The cost increased to $54,931 when interferon/ribavirin was used for a total of 48 weeks, with an expected cure rate of 66 percent. If retreatment was necessary in either circumstance, roughly 87 percent to 91 percent would be cured.

Starting hepatitis C treatment with an Incivek-inclusive regimen was expected to cure 89 percent of HCV-positive individuals with the CC IL-28B genotype—at a cost of $68,788. According to estimates of lifetime treatment costs and quality-adjusted life-years (QALYs) measurements, however, the gain did not differ significantly compared with the other two strategies.

Adding Incivek to pegylated interferon and ribavirin was cost-effective for first-time treatment takers in certain circumstances, Gellad and his colleagues noted, such as when it enhanced the early response to hepatitis C treatment (known as extended rapid virologic response, or eRVR). An eRVR—when hepatitis C viral load is undetectable at treatment week 4 and remains that way at week 12—is a strong predictor of being cured. Incivek was considered cost-effective when it boosted the eRVR rate to 89 percent. For people who did not have an eRVR, Incivek was cost effective if it could increase cure rates to over 80 percent. In addition, the authors considered Incivek to be cost-effective for retreating people who relapsed or did not respond to dual therapy.

In summary, for first-time treatment takers with the IL-28B CC genotype, adding Incivek “is unlikely to be cost-effective under current cost and efficacy conditions,” said Gellad, who concluded by recommending research to compare effectiveness of treatment with and without an HCV protease inhibitor in this group.

University of Liverpool launches an iPhone app for HCV DAA drug interactions...

(Finally, an app that is immediately practical! The new HEP i-Chart app launched by University of Liverpool researchers assists patients and providers alike in keeping up to date with possible drug-drug interactions between the new Direct Acting Antivirals for Hepatitis C and other medications and herbs. More info at http://www.hep-druginteractions.org/ )

The University of Liverpool has launched an iphone app, HEP i-chart, that provides Hepatitis C (HCV) patients with quick and easy access to the latest information about drug interactions.

Hepatitis C was first discovered in the 1980s when it became apparent that there was a new virus (not the already known hepatitis A or B) causing liver damage. Hepatitis C causes inflammation and swelling of the liver. It is estimated that over 170million individuals – representing 3% of the world's population – are chronically infected with the Hepatitis C virus (HCV). Statistically, as many people are infected with HCV as are with HIV.

Since its identification, drug treatment to eradicate the virus has advanced greatly, especially in the last few years. Two new drugs have recently been licensed for treatment of HCV, and there are more drugs in development.

HEP i-chart is based on the website (http://www.hep-druginteractions.org/) developed at the University by Professor David Back and Professor Saye Khoo which provides a comprehensive online guide to the interactions between anti-hepatitis drugs and other drugs. It is a tool that provides Hepatitis C patients and healthcare professionals with immediate access to up-to-date information on potential drug interactions between HCV drugs, and other drugs that the patient may be prescribed as well as over-the-counter, recreational or herbal medications.

Existing HCV drugs, newly licensed drugs and drugs in development can have interactions with each other and with other drugs which can impact on their effectiveness – sometimes with serious consequences. For this reason, some drug combinations must not be used, whilst others must be given with caution, possibly requiring adjustment or monitoring.

Professor of Pharmacology, David Back, said: "We are delighted to launch with our partners – KnowledgePoint360, MSD and Janssen- this new i-phone application that provides Hepatitis C patients and healthcare professionals with instant and easy access to information about HCV drug interactions which is relevant and reliable and up-to-date. This resource is especially important as new HCV drug treatments are approved and come into use."

Professor Graham Foster, President of the British Association for the Study of the Liver (BASL) said: "This new app, HEP i-chart, is a timely and much-needed resource for HCV patients as the number of new drugs which are available to treat Hepatitis C increases."

The San Francisco Chronicle on the Gilead/Pharmasset deal...

The San Francisco Chronicle speculates that Gilead's acquisition of Pharmasset...at a premium... may start a trend of other companies vested heavily in the antiviral arena buying similar, smaller companies with potentially commercially viable molecules in development. I don't know if we'll see this large a premium paid for a company again in the near future, but the article does name Inhibitex, Achillion and Idenix Pharmaceuticals as possible takeover targets by antiviral behemoths like J&J, BMS and Roche.

Gilead's Pharmasset buy may spur similar deals

Meg Tirrell,Tara Lachapelle, Bloomberg News

Tuesday, November 22, 2011

Gilead Sciences' acquisition of Pharmasset at the highest valuation on record for a drug takeover is turning makers of hepatitis C therapies from Inhibitex to Achillion Pharmaceuticals into the next targets.

Gilead agreed Monday to buy Pharmasset for $10.8 billion, valuing the developer of an experimental, oral treatment at 70 times its net assets, the most ever for a medical drug acquisition greater than $500 million, according to data compiled by Bloomberg. The price is 94 percent higher than Pharmasset's 20-day average, also the industry's richest on record. Applying that premium, Inhibitex would cost $1.1 billion, Achillion $791 million, and Idenix Pharmaceuticals $1.3 billion, the data show.

With the market for the next generation of hepatitis C therapies potentially worth $20 billion by 2020, Inhibitex, Achillion and Idenix may be bought within a year, William Blair & Co. said. While Gilead suffered its steepest stock drop in a year and a half Monday, and none of these unprofitable biotechnology companies have a hepatitis C drug for sale yet, the other targets would require no more than a fifth of the price for Pharmasset even with the same premium, the data show.

Waves of deals

"These deals tend to happen in waves," said Dan Veru, who oversees $3.4 billion including Pharmasset shares as chief investment officer of Palisade Capital Management LLC. "It's amazing to me that Gilead's willing to gamble $11 billion. It is a statement on the future opportunity to the market. Hepatitis C is an enormous business target."

Foster City's Gilead, the world's largest maker of HIV medicines, is paying $137 a share in cash for Pharmasset to gain an oral drug in development for a virus that is now largely treated with injections. The price tag is 70 times its book value, or the value of its assets minus liabilities, topping the industry's previous record of 60 times when Barr Laboratories Inc. bought Duramed Pharmaceuticals Inc. in 2001, according to data compiled by Bloomberg.

Pharmasset reported earlier this month that 40 patients who received its experimental hepatitis C treatment, PSI-7977, were responsive after 12 weeks. About half the patients had been followed up to 24 weeks and were all cured with no significant adverse events. The drug was tested in combination with ribavirin, a medication currently used in treating the disease, in patients with hepatitis C genotypes 2 and 3. Genotype 1 is most common and hardest to treat.

Hepatitis C is a viral infection that can lead to swelling of the liver. As many as 170 million people globally carry the virus, which is transmitted through exposure to infected blood, and more than 350,000 die from related illnesses each year, according to the World Health Organization.

"Hepatitis C is very prevalent in the population," said Andrew Berens, a senior health care analyst with Bloomberg Industries. "A lot of the market opportunity is going to expand if you have an all-oral regimen. We're going to see a land grab to try and get companies that are developing them."

Shares tripled

Even after Pharmasset's shares more than tripled this year before the deal was announced, the price is still 94 percent higher than its 20-day average of $70.65. That's a record for a takeover greater than $500 million in the drug industry, which has fetched an average premium of only 25 percent, according to data compiled by Bloomberg.

"Usually we associate these kinds of premiums with biotech bull markets, but it also can be a function of other possible bidders, scarcity and stage of assets," said Les Funtleyder, a health strategist and portfolio manager at Miller Tabak & Co., which owns Pharmasset shares. "If anybody was thinking about doing something in hepatitis C, they would be thinking a lot harder today than they would be yesterday."

Pharmaceutical companies that may look to expand in the market for hepatitis C treatments include Roche Holding AG, Merck & Co., Bristol-Myers Squibb Co. and Johnson & Johnson, according to Funtleyder and Brian Skorney, an analyst at Brean Murray Carret & Co.

These companies are "all heavily invested in the antiviral arena," Skorney said. "Worldwide this is a huge, huge market opportunity."

Market data provided by Bloomberg News


Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/11/22/BUBM1M2KS9.DTL#ixzz1eV5AwfCx

Gilead Sciences to Acquire Pharmasset, Inc. for $11 Billion

This is a game-changer in HCV drug development. Gilead, long a commercial juggernaut in the HBV and HIV commercial space, purchases Pharmasset whose HCV development portfolio includes it's AASLD show-stopper nucleotide analog PSI-7977. Gilead already has an impressive HCV drug development program in place and with it's expertise in antiviral co-formulation, one can foresee leveragin that expertise to Gilead's full advantage in developing all-oral HCV antiviral compounds. It will be interesting to see how the competition reacts. It could be game-over for many otherwise fledgling development programs whose molecules just won't be able to compete


Gilead Sciences to Acquire Pharmasset, Inc. for $11 Billion

- Accelerates Development of All-Oral Regimen for the Treatment of HCV -
- Leverages Gilead's Infrastructure and Expertise in Antiviral Drug Development, Manufacturing and Commercialization -

FOSTER CITY, Calif. & PRINCETON, N.J., Nov 21, 2011 (BUSINESS WIRE) --

Gilead Sciences, Inc. (Nasdaq:GILD) and Pharmasset, Inc. (Nasdaq:VRUS) announced today that the companies have signed a definitive agreement under which Gilead will acquire Pharmasset for $137 per share in cash. The transaction, which values Pharmasset at approximately $11 billion, was unanimously approved by Pharmasset's Board of Directors. 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. Further guidance will be provided when the transaction closes, which is expected to be in the first quarter of 2012.

Pharmasset currently has three clinical-stage product candidates for the treatment of chronic hepatitis C virus (HCV) advancing in trials in various populations. The company's lead product candidate, PSI-7977, an unpartnered uracil nucleotide analog, has recently been advanced into two Phase 3 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, and the second study will compare the all-oral regimen to placebo in interferon-intolerant/ineligible patients. A third Phase 3 study in genotype 1 patients will be initiated in the second half of 2012, the design of which is dependent on the outcome of Phase 2 studies which 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, an unpartnered guanosine nucleotide analog, is being tested in a Phase 2b interferon-free trial as monotherapy and in combination with PSI-7977 in subjects with HCV of all viral genotypes. Mericitabine (RG7128), a cytidine nucleoside analog, is partnered with Roche and is being evaluated in three Phase 2b trials. Roche is responsible for all aspects of the development of mericitabine.

"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," said John C. Martin, PhD, Chairman and Chief Executive Officer of Gilead. "Pharmasset presented compelling Phase 2 data earlier this month further characterizing the strong efficacy and safety profile of PSI-7977. 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."

"We are excited to join together with Gilead, which shares our commitment to providing HCV patients with new, highly efficacious and safe oral therapies," said Schaefer Price, President and Chief Executive Officer, Pharmasset. "We are very encouraged by the data from our Phase 2 studies of PSI-7977 and believe strongly in the potential of this compound to be a component in the transformation of the treatment of chronic HCV. Gilead's established expertise and leadership in the field of antiviral drug development and commercialization, coupled with the company's existing portfolio of promising compounds for HCV, make this partnership an ideal step to fully realize the potential of our promising molecules as part of future all-oral combination therapies for millions of patients in need around the world."

Gilead's research and development portfolio includes seven unique molecules in various stages of clinical development for the treatment of HCV. Pegylated interferon in combination with ribavirin is currently part of the standard of care treatment for patients with chronic hepatitis C. Gilead is focused on advancing multiple compounds with different mechanisms of action and resistance profiles in combinations that will support delivery of an all-oral regimen that would eliminate the need for pegylated interferon. Three separate all-oral Phase 2 studies are currently ongoing, and Gilead expects clinical data from these studies to become available in 2012 and early 2013. Pharmasset's compounds are complementary to Gilead's existing HCV portfolio, and the transaction will help advance Gilead's effort to develop an all-oral regimen for the treatment of HCV.

Terms of the Transaction

Under the terms of the merger agreement, a wholly-owned subsidiary of Gilead will promptly 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. Following successful completion of the tender offer, Gilead will acquire all remaining shares not tendered in the offer through a second step merger at the same price as in the tender offer.

The consummation of the tender offer is subject to various conditions, including a minimum tender of at least a majority of outstanding Pharmasset shares on a fully diluted basis, the expiration or termination of the waiting period under the Hart Scott Rodino Antitrust Improvements Act, and other customary conditions. The tender offer is not subject to a financing condition.

The $137 per share price in the transaction represents an 89% premium to Pharmasset's closing share price on Friday, November 18, 2011, the last trading day prior to announcement, and 59% to Pharmasset's all time high closing stock price.

Gilead has received commitments from Bank of America Merrill Lynch and Barclays Capital in connection with financing of the transaction.

Barclays Capital and Bank of America Merrill Lynch are acting as financial advisors to Gilead in the transaction. Morgan Stanley & Co. LLC is acting as the financial advisor to Pharmasset. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to Gilead and Sullivan & Cromwell LLP is serving as legal counsel to Pharmasset.

Conference Call

Gilead will host a conference call today, Monday, November 21, 2011, at 8:00 a.m. Eastern Time, to discuss the proposed acquisition. To access the live call, please dial 1-800-599-9829 (U.S.) or 1-617-847-8703 (international). The conference passcode number is 61526607. Telephone replay is available approximately one hour after the call through 11:00 a.m. Eastern Time, November 24, 2011. To access, please call 1-888-286-8010 (U.S.) or 1-617-801-6888 (international). The conference passcode number for the replay is 39677531. The information provided on the teleconference is only accurate at the time of the conference call, and Gilead will take no responsibility for providing updated information.

About Pharmasset

Pharmasset is a clinical-stage pharmaceutical company committed to discovering, developing and commercializing novel drugs to treat viral infections. Pharmasset's primary focus is the development of oral therapeutics for the treatment of hepatitis C virus (HCV) infection. Pharmasset's research and development efforts are focused on nucleoside/tide analogs, a class of compounds which act as alternative substrates for the viral polymerase, thus inhibiting viral replication.

About Gilead Sciences

Gilead Sciences is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. Gilead's mission is to advance the care of patients suffering from life-threatening diseases worldwide. Headquartered in Foster City, California, Gilead has operations in North America, Europe and Asia Pacific.

Forward-Looking Statement

This press release includes forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks, uncertainties and other factors. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including all statements regarding the intent, belief or current expectation of the companies' and members of their senior management team. Forward-looking statements include, without limitation, statements regarding business combination and similar transactions, prospective performance and opportunities and the outlook for the companies' businesses, including, without limitation, the ability of Gilead to advance Pharmasset's product pipeline or develop an all-oral antiviral regimen for HCV, performance and opportunities and regulatory approvals, the anticipated timing of data from clinical data; the possibility of unfavorable results of the companies' clinical trials; filings and approvals relating to the transaction; the expected timing of the completion of the transaction; the ability to complete the transaction considering the various closing conditions; and any assumptions underlying any of the foregoing. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those currently anticipated due to a number of risks and uncertainties. Risks and uncertainties that could cause the actual results to differ from expectations contemplated by forward-looking statements include: uncertainties as to the timing of the tender offer and merger; uncertainties as to how many of Pharmasset's stockholders will tender their stock in the offer; the possibility that competing offers will be made; the possibility that various closing conditions for the transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction; the effects of the transaction on relationships with employees, customers, other business partners or governmental entities; other business effects, including the effects of industry, economic or political conditions outside of the companies' control; transaction costs; actual or contingent liabilities; and other risks and uncertainties detailed from time to time in the companies' periodic reports filed with the Securities and Exchange Commission, including current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K. All forward-looking statements are based on information currently available to the companies, and the companies assume no obligation to update any such forward-looking statements.

Additional Information and Where to Find It

The tender offer described in this document has not yet commenced. This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares of Pharmasset. At the time the offer is commenced, Gilead will file a Tender Offer Statement on Schedule TO with the U.S. Securities and Exchange Commission, and Pharmasset will file a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the offer. Pharmasset stockholders and other investors are urged to read the tender offer materials (including an Offer to Purchase, a related Letter of Transmittal and certain other offer documents) and the Solicitation/Recommendation Statement because they will contain important information which should be read carefully before any decision is made with respect to the tender offer. The Offer to Purchase, the related Letter of Transmittal and certain other offer documents, as well as the Solicitation/Recommendation Statement, will be made available to all stockholders of Pharmasset at no expense to them. The Tender Offer Statement and the Solicitation/Recommendation Statement will be made available for free at the Commission's web site at www.sec.gov. Free copies of these materials and certain other offering documents will be made available by Gilead by mail to Gilead Sciences, Inc., 333 Lakeside Drive, Foster City, CA 94404, attention: Investor Relations.

In addition to the Offer to Purchase, the related Letter of Transmittal and certain other offer documents, as well as the Solicitation/Recommendation Statement, Gilead and Pharmasset file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any reports, statements or other information filed by Gilead or Pharmasset at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the public reference room. Gilead's and Pharmasset's filings with the Commission are also available to the public from commercial document-retrieval services and at the website maintained by the Commission at www.sec.gov.

For more information on Gilead Sciences, please visit the company's website at www.gilead.com or call Gilead Public Affairs at 1-800-GILEAD-5 or 1-650-574-3000.



SOURCE: Gilead Sciences, Inc.

Gilead
Susan Hubbard, 650-522-5715 (Investors)
Amy Flood, 650-522-5643 (Media)
or
Pharmasset
Richard E.T. Smith, 609-865-0693 (Investors)
or
Sard Verbinnen & Co
Andrew Cole/Chris Kittredge, 212-687-8080 (Media)

Achillion Is in Talks With Potential Buyers or Partners...

This is a follow-up to the Motley Fool article I posted in the LinkedIn version of this blog, which proposed a more pragmatic approach to potential buyers or partners for Achillion drugs. Greenspan's "irrational exuberance" quote does come to mind here as larger companies race to get a competitive edge in the HCV marketplace. HCV drug development has particularly been unkind to Novartis, one of the rumored suitors named in this article.


Achillion Is in Talks With Potential Buyers or Partners

Nov. 18 (Bloomberg) -- Achillion Pharmaceuticals Inc., expecting clinical data on three experimental hepatitis C therapies, is in “advanced discussions” with potential partners and acquirers, Chief Executive Officer Michael Kishbauch said. The shares jumped 8.2 percent.

If the results, due about year’s end, are positive, “we become a probable ‘transactable’ company,” Kishbauch said yesterday in an interview at the Achillion’s headquarters in New Haven, Connecticut. “We’re prepared to be patient and pick the best deal.”

Licensing deals, asset sales or selling the entire company are all possibilities, Kishbauch said. Achillion doesn’t have any products on the market. The board’s preference would be for “simplicity,” he said, referring to a full sale.

“The nature of discussions suggests that’s most likely,” he said. The question is timing, as Achillion plans to have data on a combination of hepatitis C therapies by the middle of 2013. “Theoretically the value of the company is increasing” as those results approach, he said.

Achillion rose 44 cents to $5.84 at the close of trading in New York, for the biggest gain since Oct. 27. The shares have gained 41 percent this year.

The company had a market value earlier today of about $370 million, and could command double that in a sale, said Y. Katherine Xu, an analyst with William Blair & Co. in New York.

Awaiting Data

Data on the three experimental medicines would provide a “definitive point for people who want to take a look at the assets,” Xu said in a telephone interview today. Potential suitors may include GlaxoSmithKline Plc and Novartis AG, drugmakers that have interest in hepatitis C, with programs too early in development to be competitive, Xu said.

“They’re kind of losing the game and they have to do something,” Xu said. Achillion’s medicines “could be competitive. We just don’t know the data yet.”

“We don’t comment on rumors and speculation,” Eric Althoff, a spokesman for Basel, Switzerland-based Novartis, said by phone today. David Daley, a spokesman for Glaxo in London, couldn’t immediately be reached for comment.

--With assistance from Simeon Bennett in Geneva and Makiko Kitamura in London. Editors: Bruce Rule, Chris Staiti

To contact the reporter on this story: Meg Tirrell in New York at mtirrell@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net