Roche Holding AG (ROG) agreed to buy Anadys Pharmaceuticals Inc. (ANDS) for about $230 million to build its portfolio of experimental drugs for hepatitis C, a market that may be worth as much as $15 billion annually by 2019.
Anadys holders will receive $3.70 a share in cash, Basel, Switzerland-based Roche said in a statement today. That’s more than triple San Diego-based Anadys’s closing price on Oct. 14 of $1.04 in Nasdaq Stock Market composite trading. Anadys more than doubled to $3.65 at 4 p.m.
Anadys’s most advanced drug candidate, setrobuvir, is being studied in combination with the generic antiviral pill ribavirin and interferon, an injection sold by Roche as Pegasys. The U.S. company’s compounds could help Roche develop a therapy that doesn’t require the use of interferon, Jean-Jacques Garaud, Roche’s head of pharmaceutical research and early development, said in the statement.
“We see a potential upside for Roche’s hepatitis C franchise,” Andrew Weiss, a Zurich-based analyst for Bank Vontobel AG, wrote in a note to investors today. Weiss, who recommends buying Roche’s shares, estimated the drugmaker’s annual hepatitis C-therapy sales will peak at 1.7 billion Swiss francs ($1.91 billion).
Today’s deal follows an agreement between Roche and Merck & Co. in May to work together to market hepatitis C treatments in the U.S. The Whitehouse Station, New Jersey-based drugmaker won U.S. approval for Victrelis, the first new hepatitis C treatment in a decade, in May. Roche will include the drug, also known as boceprevir, in its marketing for Pegasys.
Victrelis competes with Incivek, or telaprevir, a second new hepatitis C treatment from Vertex Pharmaceuticals Inc. (VRTX) also approved this year. Roche is selling more Pegasys in combination with the Vertex drug than with its partner Merck’s medicine, Pascal Soriot, head of the Swiss company’s pharmaceutical unit, said in an Oct. 13 conference call.
Jefferies International Ltd. estimates the market for hepatitis C drugs may total $15 billion a year by 2019.
Anadys is also conducting early clinical trials on ANA773, a potential treatment for hepatitis C, other chronic infections and cancer.
The Swiss company said it aims to begin a tender offer “promptly” for Anadys’s shares, and expects the bid to be completed this year. Citigroup Inc. bankers are advising Roche, and Davis Polk & Wardwell LLP is providing legal advice. Anadys is using Lazard Ltd. (LAZ) as bankers and Cooley LLP for legal advice.
Roche fell 0.8 percent to 141.6 Swiss francs in Zurich. The stock has risen 3.4 percent this year.
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