Deals and IPOs

Merck to buy Idenix to boost hepatitis C drugs portfolio

Merck employees walk past a Merck sign in front of the company's building in Summit, New Jersey.
Kena Betancur | Getty Images

Merck said it would buy Idenix Pharmaceuticals in a deal valued at about $3.85 billion to strengthen its hepatitis C drugs portfolio.

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The deal comes as drugmakers look to beef up their hepatitis C drug offerings to better compete with Gilead Sciences, which has captured the hepatitis C drugs market with its treatment, Sovaldi.

Cambridge, Massachusetts-based Idenix, which focuses on the treatment of human viral diseases, has three drugs in development to treat hepatitis C.

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An estimated 3.2 million people in the United States are living with chronic hepatitis C infection, with most being unaware of the infection and showing no symptoms, according to the U.S. Centers for Disease Control and Prevention.

Sovaldi, which costs about $84,000 a year per patient, generated $2.3 billion in sales in the first few months on the market.

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Idenix's experimental drug, IDX21437, in combination with Merck's two experimental drugs, MK-5172 and MK-8742, has the potential to cure patients with every genotype of the hepatitis C virus within four-six weeks, Merck's research chief Roger Perlmutter told Reuters on Monday.

Without the Idenix drug, the two Merck drugs cured a "high nineties" percentage of patients after 12 weeks of treatment, he said.

Behind the Merck-Idenix deal

Merck said it would pay $24.50 per share, which is more than three times Idenix's Friday closing price of $7.23.

The companies said they expected the transaction to close in the third quarter.

Idenix said in March it was involved in a patent dispute with Gilead related to its hepatitis C treatment in Oslo, Norway.

Credit Suisse acted as the financial adviser to Merck, while Hughes Hubbard & Reed was its legal adviser.

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Centerview Partners was Idenix's financial adviser and Sullivan & Cromwell acted as its legal adviser.

Idenix's shares soared almost 240 percent to $24.35 in premarket trading on Monday. (Click here for the latest quote.) Shares of Achillion Pharmaceuticals, another maker of hepatitis C drugs, jumped nearly 30 percent. (Click here for the latest quote.)

Merck's shares were down slightly in light trading before the bell. (Click here for the latest quote.)

By Reuters