Roche: New Era Of Hepatitis Therapies Creates Short-Term Threat, Long-Term Opportunity

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 |  About: Roche Holding Ltd ADR (RHHBY), Includes: ANDS
by: The Burrill Report

By Michael Fitzhugh

Roche (OTCQX:RHHBY) says it plans to pay $230 million for Anadys Pharmaceuticals (NASDAQ:ANDS), a San Diego-based developer of small molecule therapeutics for the treatment of hepatitis C. Anadys’ compounds could bring Roche closer to a cure for the viral infection, or at least closer to interferon-free treatment regimen, says Jean-Jacques Garaud, Global Head of Roche Pharma Research and Early Development.

Setrobuvir, Anadys’ most advanced drug candidate, is an oral drug in mid-stage clinical testing in combination with Roche’s injectable pegylated interferon, Pegasys, and its brand of ribavirin, Couperus.

The company is also developing ANA773, an oral, small-molecule inducer of innate immunity. That compound is in early-stage trials and may prove useful for treating hepatitis C as well as other chronic infections and cancer, Roche says.

Anadys shareholders will get $3.70 per share in the all-cash transaction, representing a 256 percent premium to the closing value of their shares on October 14.

A new era of interferon-free hepatitis therapies creates both a short-term threat and a long-term opportunity for Roche. In 2010, the company made $1.8 billion (CHF 1.6 billion) from sales of Pegasys. But Pegasys loses patent protection in 2017 and a new wave of oral hepatitis therapies is likely to become the new standard of care by then, sparing patients from interferon’s flu-like side effects and delivery method by injection.

Abbott Laboratories (NYSE:ABT), for instance, says that by 2015, it expects an interferon-free combination therapy it is testing could generate as much as $2 billion in sales annually.

Roche has been active in seeking to develop and promote new therapeutic combinations incorporating its own products. In May, it agreed to help Merck (NYSE:MRK) promote its new hepatitis C therapy, Victrelis, which is taken with both a pegylated interferon and ribavirin, such as those in Roche’s portfolio.