Gilead Acquires Pharmasset for $11 Billion

On Nov. 21, 2011, Gilead Sciences agreed to acquire Pharmasset for $137 per share in cash, or a total of approximately $11 billion. Pharmasset’s board of directors unanimously approved the transaction, which is expected to close during the first quarter of 2012. Gilead will finance the transaction with cash, bank debt, and senior unsecured notes.

Pharmasset has three clinical-stage product candidates for the treatment of chronic hepatitis C virus (HCV). The company’s lead product candidate, PSI-7977, an oral unpartnered uracil nucleotide analog, is in two Phase III studies in genotype 2 and 3 patients. A third Phase III study in genotype 1 patients will be initiated in the second half of 2012. If the trials are successful, PSI-7977 could receive initial US regulatory approval in 2014. PSI-938, an unpartnered guanosine nucleotide analog, is being tested in a Phase IIb 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 developed with Roche, is being evaluated in three Phase IIb trials. Roche is responsible for all aspects of the development of mericitabine.

Gilead’s R&D portfolio includes seven molecules in various stages of clinical development for the treatment of HCV. Pegylated interferon, in combination with ribavirin, is currently part of the standard treatment for patients with chronic hepatitis C. Gilead is focusing on compounds with various mechanisms of action and resistance profiles in hopes of creating an all-oral regimen that would eliminate the need for pegylated interferon. Three separate all-oral Phase II studies are ongoing, and Gilead expects clinical data from these studies to become available in 2012 and early 2013. Pharmasset’s compounds complement Gilead’s HCV portfolio, and the transaction will help Gilead’s effort to develop an all-oral regimen for treating HCV.

“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, chairman and CEO of Gilead, in a press release. “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 very encouraged by the data from our Phase II 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,” said Schaefer Price, president and CEO of Pharmasset, in the press release. “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.”