Hep C drug deal frenzy can't be slowed by growing doubts

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At the BIO CEO & Investor Conference in New York yesterday, Achillion CEO Michael Kishbauch wrapped up his remarks on the biotech's hepatitis C programs by making it clear that he was angling for a clean buyout for a premium that would "put a silly grin on all our faces." A merger of equals, he made clear, was not his first choice. And he is actively in pursuit of a deal.

Kishbauch has made no secret of his delight that Achillion is positioned at one of the busiest intersections in the R&D world. Captivated by the megablockbuster prospects of a next-gen oral therapy that can quell the hep C virus without the use of interferon injections, which trigger a hornet's nest of adverse effects for many patients, investors have been bidding up the value of Achillion's stock ($ACHN) as well as Idenix ($IDIX), the two independent biotechs which are furthest down the pipeline after the big acquisitions of Pharmasset ($VRUS) and Inhibitex ($INHX).

Kichbauch's theory, widely held in the industry, is that a few key cocktail treatments that can quickly knock down the virus and keep it in check will relatively soon be able to divvy up a $20 billion marketplace. And he believes Achillion holds the ticket for any company looking for the inside track on that drug race.

Bloomberg isn't letting anyone forget, either. In the latest iteration of the spotlight now trained on hepatitis C, the business news service once again stirs the pot of takeover speculation, quoting Raghuram Selvaraju, an analyst with Morgan Joseph TriArtisan, as a believer in the common view that buyouts for Achillion and Idenix are inevitable.  

"I don't think either of these companies will remain independent very long," Selvaraju said in a telephone interview. "I think we'll see both of them out of there by the end of the year."

Looking for further proof? Shares of BioCryst ($BCRX) spiked 17% this morning on its release touting positive preclinical results for BCX5191, a hepatitis C drug that supposedly has rung all the key bells: Signs of potent pan-genotype antiviral activity in its in vitro and in vivo work.

Normally, preclinical results don't warrant much attention in the biotech world. But that was before Pharmasset was acquired for close to $11 billion. The overheated response, though, is earning some frowns in the Big Pharma world. Moncef Slaoui, GlaxoSmithKline's ($GSK) R&D chief, has now joined Sanofi's ($SNY) Chris Viehbacher in voicing doubts about the sums being paid for risky experimental programs. Time will tell whether the hep C buyout frenzy has already peaked, or whether the speculators can still cash in.   

- read the Bloomberg article
- here's the release from BioCryst

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