After the big biotech deal comes the big biotech buzz. And one of the big questions on everyone's mind after Gilead Sciences (NAS: GILD) announced its $11 billion deal to acquire Pharmasset is, "Who's next?" Would Inhibitex, Achillion or Idenix be the next biotech to find itself in the cross hairs of a potential suitor? Would these new deals rival Gilead's willingness to pay 70 times net assets to complete a deal?
Pharmasset (NAS: VRUS) , of course, had already established itself as one of the hottest biotechs in the U.S. as it moved toward pivotal trials of a possible new interferon-free approach to treating hepatitis C. Analysts quickly factored in a multibillion-dollar market impact if the biotech's lead drug actually keeps to a brisk schedule pointing to a 2014 approval. Investors had bid up Pharmasset's share value before Gilead came up with its final offer -- a jaw-dropping premium considering the way most speculative biotech stocks are priced these days.
"These deals tend to happen in waves," Dan Veru, Palisade Capital Management's chief investment officer, dishes to Bloomberg. And with William Blair estimating that next-gen hep C drugs will garner a $20 billion market by 2020, you can bet that investors' tongues will be wagging as the odds-makers line up prospective buyouts.
Achillion Pharmaceuticals' (NAS: ACHN) CEO had already triggered some modest speculation when he told Bloomberg last week that he had been in "advanced talks" with possible buyers. But Inhibitex (NAS: INHX) may be the leader of the pack right now, as its rival INX-189 bears some resemblance to Pharmasset's lead program. Idenix Pharmaceuticals' (NAS: IDIX) IDX184, which will start delivering midstage data in the next quarter, is another Pharmasset look-alike that could attract the attention of buyers turned away from the bidding for Pharmasset.
But now that Pharmasset set the bar so high on valuations, who can afford to keep up with Gilead?
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