Bristol bags hot hep C drug developer Inhibitex for $2.5B

Proving once again that hepatitis C is the hottest disease in biotech right now, Bristol-Myers Squibb ($BMY) has stepped up to the deal table with a $2.5 billion pact to buy out Inhibitex ($INHX), a small developer with a potential game-changing treatment in mid-stage development. The deal not only marks BMS's biggest payout in 5 busy years of wheeling and dealing, it's also another clear sign that big biopharma groups are willing to shell out big bucks in order to buy a competitor in the race to a better treatment and a blockbuster market.

The prize: INX-189, a mid-stage treatment that promises to give Gilead ($GILD) a run for its money after the California company struck an $11 billion deal to buy Pharmasset ($VRUS), which has been pushing PSI-7977 in late-stage studies as a potential best-in-class therapy for hepatitis C.

"This drug is the best chance anyone has of competing with Gilead/Pharmasset," noted Brean Murray Carret's Brian Skorney, according to a report in Bloomberg. "That explains the premium."

To get the company, BMS is putting up $26 a share for Inhibitex, a big premium over its $9.87 close on January 6. But after Gilead's recent $11 billion purchase of Pharmasset, no one is saying this morning that BMS is paying too much. Analysts have been unanimous that an all-oral treatment for hepatitis C--especially one that can eliminate the need for interferon--can quickly seize a market worth $3 billion to $5 billion a year. And you can expect to see more hepatitis C deals as developers with other promising treatments get scooped up by rival companies.

BMS has been widely lionized for its "string of pearls" strategy for beefing up its pipeline. With the recent success of Yervoy the company's deal-making team has been winning kudos around the globe. That's why Teva has turned to Bristol's chief deal-maker--Jeremy Levin--to helm the much bigger company.

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