Merck's Acquisition Of Idenix Pharmaceuticals Is An Admission Of Inferiority To Sovaldi Regimens

10-06-2014 Seeking AlphaComments (0)

Idenix PharmaceuticalsMerck & Co

First and foremost, congratulations to the Idenix (IDIX) team and shareholders, it has been a long, treacherous road the past few years, with many disappointments along the way. With the pleasantries out of the way, the discussion herein will focus on the implications of Merck's (MRK) $3.85B acquisition of IDIX (at a 3.4X premium to Friday's close) on Gilead (GILD).

It is apparent to us that MRK's decision to risk $3.85B of shareholder capital for IDIX "Nuc" assets, including IDX21437 (Phase I/II) and IDX21459 (Phase I study ongoing) was driven by its revelation that MK-5172+MK-8742 regimens will require a "Nuc" for optimal activity in genotypes 2/3. Furthermore, it is an admission by MRK that its MK-5172+MK-8742 combo is not competitive, relative to Gilead's 3rd and 4th-wave regimens with GS-9451, GS-9669, GS-9620, and GS-9857, all of which carry $0 in value in analysts' models, despite 3 of these assets being ahead

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