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Gilead's $11 billion HCV bet

Gilead Sciences, market leader in human immunodeficiency virus (HIV) drugs, has set out to also dominate the fast-growing hepatitisC virus (HCV) field by acquiring Princeton, New Jersey–based Pharmasset for $11 billion. The valuation is lofty for a company with no drugs on the market, and some have questioned the price paid for Pharmasset's candidate PSI-7977, a nucleotide analog polymerase inhibitor. But New York analyst Phil Nadeau, of Cowen & Co., says “[PSI-7977] is best positioned to be the Viread of HCV.” Gilead's Viread (tenofovir) is currently the cornerstone of HIV treatment. The Foster City, California–based large biotech is now wagering that PSI-7977 can transform the treatment paradigm for HCV: the drug candidate is oral and does not require the use of injectable alpha interferon, unlike newly approved protease inhibitors Incivek (telaprevir) and Victrelis (boceprevir) (Nat. Biotechnol. 29, 963–966, 2011). Strong efficacy data in genotypes 2 and 3 and safety data in genotype 1 indicate a “reasonable likelihood” that the gamble may pay off, Nadeau says. The drug could hit the market in 2014, but would need to earn $3 billion a year for several years to make the acquisition neutral to Gilead shareholders. “Why is it so much money?” Nadeau says. “I think the practical answer is Pharmasset wasn't going to sell itself for less.” On January 17, Bristol-Meyers Squibb agreed to pay $2.5 billion for small biotech Inhibitex in Atlanta, and its lead experimental HCV drug INX-189.


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Carey, K. Gilead's $11 billion HCV bet. Nat Biotechnol 30, 122 (2012).

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