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Roche Makes $230 Million Bet on Hepatitis Drug Developer Anadys


The Swiss drug maker plans to pay a 256% premium for a company it hopes will strengthen its development of treatments for the liver-destroying virus.

Roche is making a $230 million bet on hepatitis C drug developer Anadys Pharmaceuticals (ANDS), a company the big Swiss drug maker agreed to buy for a whopper of a premium.

The companies announced Monday that Roche will pay $3.70 a share in cash for San Diego-based Anadys, a 256% premium over the biotech stock's closing price Friday. Granted, the deal size amounts to a snack for behemoth Roche. But the price emphasizes the value of experimental hepatitis C treatments, a category that's getting a lot of investor attention.

Anadys is studying a couple of drug candidates for hepatitis C -- a treatment to be taken with older medicines and a pill in the early stage of development. The goal for hepatitis C drug developers is to bring to market a pill that can be taken without the need for an injection of the immune system-boosting drug interferon (made by Roche and others).

"Our aim is to offer physicians and hepatitis patients a powerful combination of therapies that bring us closer to a cure, even without the use of interferon," Jean-Jacques Garaud, Roche's head of drug R&D says in a statement. "Anadys' compounds provide additional modes of action that could lead to interferon-free treatment regimens without viral resistance."

Roche already is partnered with Pharmasset (VRUS), a hepatitis C drug developer whose price has more than tripled this year, to develop a new treatment. (See Pharmasset Rises to New Highs on Hepatitis C Drug.) That drug is in the middle stages of testing and Roche hopes to file for US approval in 2014. A year ago, Roche bought out development partner InterMune's (ITMN) stake in the experimental hepatitis drug danoprevir for $175 million. (See InterMune Feels the Squeeze, Drops Hep C Drug to Focus on Rare Lung Disease Treatment.) Roche hopes to file for approval of that experimental drug in 2014 as well. The company also is studying an early stage hepatitis drug. With the Anadys deal, Roche adds to its development arsenal.

The liver-wasting virus, which infects millions of Americans, represents a large treatment market. Even though new drugs by Vertex Pharmaceuticals (VRTX) and Merck (MRK) were approved this year, companies like Pharmasset are moving ahead with the next generation of treatment. While it would be an attractive takeover based on its clinical pipeline, Pharmasset would be quite expensive for a rival to buy considering the company's almost $6 billion market value.

Some small companies, such as Achillion Pharmaceuticals (ACHN), Inhibitex (INHX), and Idenix Pharmaceuticals (IDIX) may draw some attention from bigger companies, however. (See Buying Into a Hot Hepatitis C Drug Market.)

William Blair analyst Y. Katherine Xu notes today that all three companies may be takeover targets. She has buy ratings on Achillion and Inhibitex and a hold on Idenix.

Twitter: @brettchase
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