On Monday, there was a rise in share prices for companies who are studying potential new treatments for hepatitis C. This after Swiss drugmaker Roche (OTCQX:RHHBY) agreed to buy Anadys Pharmaceuticals (NASDAQ:ANDS) for $230 million.
Industry observers believe the deal could mean greater competition for the two recently approved hepatitis C drugs, Vertex's (NASDAQ:VRTX) Incivek and Merck and Co.'s (NYSE:MRK) Victrelis. Food and Drug Administration regulators cleared both drugs for marketing in May and a report from the Associated Press indicates that analysts expect both companies to generate billions in sales from both drugs.
Hepatitis C is a viral disease that leads to swelling (inflammation) and damage to the liver. Most people who were recently infected with hepatitis C do not have symptoms and about 4 million Americans have the disease, and many are undiagnosed.
Although the recently approved drugs for the disease marked the first breakthroughs for hepatitis C treatments in approximately 20 years, a number of other companies are researching other treatments and drugs. Researchers at those firms hope that these new drugs have better cure rates and that they can be used for less time, reducing side effects.
Roche's deal values Anadys at $3.70 per share, more than triple its Friday closing price of $1.04. The stock closed at $3.66 on Monday- rising 250% and trading 45,839,427 shares- about a 9000% increase above the average during regular trading hours.
JMP Securities analyst Liisa Bayko sent a note to clients saying that she expects she expects more hepatitis drug developers to be acquired. "We anticipate more deal making in the hepatitis C virus space in 2012 as companies accrue longer-term safety data on the earlier stage assets in the pipeline," she wrote.
Also rising were shares of Achillion Pharmaceuticals (NASDAQ:ACHN) 5.89+0.07 (1.20%), Idenix Pharmaceuticals Inc. (NASDAQ:IDIX) 5.15+0.01 (0.19%), and a stock we told our readers about last week: Inhibitex Inc. (NASDAQ:INHX) continued to force shorts to cover as it climbed closing at $3.63+0.43 (13.44%).
Inhibitex shares, which have been climbing during the past few sessions, broke past an important point of price resistance at the $3.35 level, and must now make it past $3.67 in order to match their 52-Wk High of $ 5.23.
As we previously reported, smart money likes Inhibitex. Institutions own 63.20% of the firm's 78.3M shares. Trading volume had been higher than average by approximately 300% during the past few sessions, but volume shot up nearly 500% on Monday and many of those with short positions in the stock covered their position and added to the buying pressure.
Any number of these biotech firms could become an acquisition target for Big Pharma. Achillion (ACHN) is conducting human trials of three potential hepatitis C drugs and preclinical studies of a fourth. Its most advanced drug candidate, ACH-1625, is in mid-stage trials. Last month, Inhibitex announced that it had commenced dosing in a 90-patient randomized, placebo controlled, Phase 2 clinical trial to evaluate the safety, tolerability and antiviral activity of INX-189 in combination with pegylated interferon and ribavirin in chronic HCV-infected genotype 2 and 3 treatment naïve patients. Results are expected in sometime in the first quarter of 2012.
Achillion and Inhibitex do not have any products on the market, while Idenix already gets royalties on sales of the hepatitis C drug Tyzeka and is the largest of the four companies, with a market capitalization of about $500 million.
Prior to the acquisition, Anadys did not have any approved products, but it is studying two potential hepatitis C treatments.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.