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Merck Hepatitis C Drug May ‘Anchor’ Future Worldwide Regimen

Merck & Co. will make whatever deals are necessary to ensure the company leads the race for future hepatitis C combination therapies, said Roger Pomerantz, the drugmaker’s worldwide head of licensing and acquisitions.

“Our goal is to be a leader in hepatitis C, and we will do what it takes to get there,” Pomerantz said in an interview at the J.P. Morgan Healthcare Conference in San Francisco. “We would consider small deals to large deals, whatever is necessary to lead in hepatitis.”

Merck, the second-biggest U.S. drugmaker, won U.S. approval in May for Victrelis, the first hepatitis C drug in almost a decade. The company’s pill and Vertex Pharmaceuticals Inc. (VRTX)’s Incivek, cleared for sale just 10 days after Victrelis, are easier to use and have fewer side effects than existing injection treatments. Now the Whitehouse Station, New Jersey- based company is in the second stage of testing for a more powerful drug that may work against all strains, Pomerantz said.

If trials are successful for the drug, called MK-5172, the therapy may become the foundation medicine for future combination pill treatments, he said.

“What we have seen makes us quite optimistic that the drug could be an anchor,” he said.

Growing Market

As many as 170 million people worldwide carry the hepatitis C virus, a bloodborne disease that can lead to liver cirrhosis and cancer, according to the Centers for Disease Control and Prevention in Atlanta. The new pills, used in combination with the injectible treatments, have a higher cure rate than previous therapies alone. Incivek and Victrelis are so-called protease inhibitors that work by blocking an enzyme used by the hepatitis C virus to copy itself.

The market for medicines against the disease is about $3 billion worldwide, according to Andrew Berens, a senior health- care analyst with Bloomberg Industries, in Skillman, New Jersey. It may be worth $20 billion by 2020, said Michael Kishbauch, chief executive officer of Achillion Pharmaceuticals Inc. (ACHN), the maker of another experimental treatment, in a November interview.

The race to gain an all-pill regimen for hepatitis C has led to two recent deals. Bristol-Myers Squibb Co. (BMY) said on Jan. 7 it would pay about $2.5 billion in cash to buy Inhibitex Inc. (INHX) Pharmasset agreed to be acquired by Gilead Sciences Inc. (GILD) for $10.8 billion in a deal announced Nov. 21.

Possible Targets

Idenix Pharmaceuticals Inc. (IDIX), which also has a hepatitis C drug candidate, and Achillion rose in trading on speculation they may be acquired like Inhibitex and Pharmasset. Idenix, based in Cambridge, Massachusetts, gained 24 percent to $12 at the close in New York and New Haven, Connecticut-based Achillion increased 22 percent to $11.90.

The companies yesterday also reported successful results of early clinical trials for their experimental drugs.

Achillion is “not eager to go out and plant a ‘for sale’ sign on our front lawn,” Mary Kay Fenton, the company’s chief financial officer, said yesterday in an interview at the health- care conference. Instead, Achillion is concentrating on developing its drug candidates, she said.

“There’s so much euphoria in the hepatitis C space” after the recent deals, she said, “it’s easy to lose focus on the fact that we’re developing drugs that patients need.”

Merck is considering a range of possibilities for new pill combinations, including the company’s experimental drugs, partnership agreements or acquisitions, Pomerantz said. The flurry of activity in hepatitis C reflects a unique opportunity to come up with a cure, he said.

“We have a curable disease and I think that people are reacting to the fact there may be a window of opportunity to put the right combinations together,” Pomerantz said in the interview.

Merck rose less than 1 percent to $38.52. The company gained 3.5 percent in the past 12 months.

To contact the reporter on this story: Robert Langreth in New York at rlangreth@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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