Gilead Sciences Inc., the world’s largest maker of HIV medicines with Branford operations, agreed to buy Pharmasset Inc. for about $11 billion, betting that its experimental hepatitis C treatments will lead the next generation of therapies in a market that may reach $20 billion by 2020, Bloomberg News reports.
Gilead will pay $137 a share in cash, 89 percent more than the closing price for Pharmasset on Nov. 18, the companies said in a statement today. The purchase, Gilead’s biggest, will reduce the Foster City, Calif., company’s earnings through 2014 and then add to profit, the statement said.
Pharmasset is developing oral drugs for an illness now largely treated by injections. Earlier this year, Merck & Co. and Vertex Pharmaceuticals Inc. won approval for the first new therapies for hepatitis C, or HCV, in almost a decade.
Companies including Inhibitex Inc. and New Haven’s Achillion Pharmaceuticals Inc. are also racing to develop medicines for the virus.
The purchase “clearly sends a strong statement that Gilead is intent on becoming the leader in HCV over the next decade and wants the key drugs to make it happen,” Michael Yee, an analyst with RBC Capital Markets in San Francisco, wrote in an e-mail today. Pharmasset’s experimental drug, PSI-7977, “could add $3 billion to $5 billion in revenues over the long term,” he said.
Gilead fell 10 percent to $35.72, at 10:16 a.m. New York time after rising 10 percent this year through yesterday. Pharmasset, of Princeton, New Jersey, rose 85 percent to $134.22. Those shares had tripled this year before today.
Gilead had $7.9 billion in sales last year. Pharmasset, with 82 employees, reported a net loss of $91.2 million, or $1.25 a share, on revenue of $900,000 for the fiscal year ended Sept. 30. Erik Gordon, a business professor at the University of Michigan, said the purchase is a gamble.
