6. Merck & Co./Idenix Pharmaceuticals

Deal value: $3.85 billion
Deal status: Closed

Looming in the background of Merck's ($MRK) $3.8 billion deal for Idenix Pharmaceuticals ($IDX) was Gilead Sciences and the runaway success of its hepatitis C fighter Sovaldi. Not only was Gilead's ($GILD) drug first to market, but its ability to cure patients of the disease in 12 weeks, preventing the need for liver transplants in some cases, set a benchmark. Some subtypes of the disease are expected to need only 8 weeks of treatment.

The fact that Merck paid so much for Idenix was an indication to some analysts that Merck CEO Ken Fraser was uncertain that his own company's hep C fighter was going to match Sovaldi. RBC Capital Markets analyst Michael Yee told clients as much when the deal was announced. "Merck currently does not have a pan-genotypic regimen to go after GT2/3 and a G1 regimen that can get down to 8 weeks like Gilead has." That is what Idenix offered, although its drugs are several years from approval.

Indirectly, Merck R&D chief Roger Perlmutter said much the same thing, but taking the positive approach: "Idenix's investigational hepatitis C candidates complement our promising therapies in development and will help advance our work to develop a highly effective, once-daily, all-oral, ribavirin-free, pan-genotypic regimen that has a duration of treatment as short as possible for millions of patients in need around the world."

Merck, AbbVie ($ABBV) and Bristol-Myers Squibb ($BMY) are all getting near with oral, interferon-free therapies that may challenge Sovaldi. But Gilead got ahead again this month by getting approval for Harvoni, its cocktail that combines NS5A inhibitor ledipasvir and Sovaldi.

In a note to investors, ISI Group analyst Mark Schoenebaum supported Gilead's own assertions that many patients won't need a full 12-week course of Harvoni to cure the virus, another indicator of what a competing drug would face. Schoenebaum said that while "12 weeks appears recommended for all patients without cirrhosis (naïve and experienced) and 24 weeks for all with cirrhosis," 45% of patients would likely receive 8 weeks of therapy for $63,000, a discount to the $93,000 price Gilead has put on the cocktail.

For more:
Payers hit back at Gilead for $94,500 price tag on brand-new hep C combo pill
Merck snatches Idenix for $3.8B as it watches Sovaldi gobble up market
AbbVie makes a run at early EU OK for hep C cocktail
Gilead's Sovaldi turns in outsize Q1 sales

-- Eric Palmer (email | Twitter)

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6. Merck & Co./Idenix Pharmaceuticals