I think I said, when this deal was announced, that everything needed to go perfectly, to defend the price paid (and of course, nothing ever does).
Apparently Gilead has suffered its first setback in the Pharmasset-acquired next generation (all oral) Hep C program. Gilead’s experimental GS-7977 plus ribavirin failed to suppress the hepatitis C virus in a group of difficult-to-treat patients who had also failed prior therapy, Gilead just announced, this morning.
Gilead stock is down 15 percent on huge volume.
Per the Wall Street Journal, now:
. . . .Gilead obtained the drug, GS-7977, with its $11 billion purchase of Pharmasset last month. Gilead has billed GS-7977 as the anchor of what the company expects to be the first all-oral regimen for hepatitis C to reach the market, potentially in 2014, and analysts have predicted the drug has multibillion-dollar annual sales potential. Current standard treatments include an injectable drug.
A clinical trial of GS-7977, titled “Electron,” included an arm testing the drug in patients with a form of hepatitis C known as genotype 1, who had previously seen little or no decrease in the virus after treatment with a regimen containing an older drug, interferon.
That’s bad news for Gilead — and a much longer “leading-in-the-existing market” time, for Vertex (and to a lesser extent, Merck).
We will keep you posted, but my earlier prediction (November 2011) that this market belongs to Vertex until at least 2016, looks to be dead on. I’m not quite ready to say, definitively, that Gilead overpaid, but it sure looks like it, given today’s news.