August 17, 2015
By Mark Terry, BioSpace.com Breaking News Staff
At least one analyst is again speculating that Foster City, Calif.-based Gilead Sciences, Inc. may be ready to acquire New Haven, Conn.-based Achillion Pharmaceuticals, Inc. .
Given the company’s strong financial performance this year, many analysts believe Gilead is in the market for a strategic acquisition. About 95 percent of the company’s revenue is generated by hepatitis C drugs Sovaldi and Harvoni. At the company’s second quarter financial filing, it reported $8.244 billion in revenue for the quarter, up from $6.535 billion in the same quarter in 2014. It’s half-year numbers were $15.838 billion, up from $11.534 billion the previous year.
Gilead’s pipeline includes 11 drugs for hematology-oncology, four for cardiovascular indications, eight for inflammatory-respiratory drugs, and eight for liver disease. Gilead underwent a price war with Chicago-based AbbVie over hepatitis C drugs in December and January, with Gilead locking down health insurance company Anthem, Inc. and CVS Health Corp. to exclusively sell Harvoni and Sovaldi. AbbVie inked an exclusive agreement with Express Scripts Inc.. But that seems to have died down a bit, with Gilead appearing to be the winner, with Sovaldi and Harvoni dominating about 90 percent of the hepatitis C market.
Over a 12-week period, Harvoni has a 100 percent cure rate for HCV and doesn’t need to be administered with ribavirin or interferon, its primary advantage over AbbVie ’s Viekira Pak. With a 100 percent cure rate, the next step, argue analysts, is to cut the treatment time down. Payers and patients might disagree with that assessment, preferring an HCV treatment that doesn’t cost $95,000 per course of treatment.
Achillion has an HCV candidate, Odalasvir, which has achieved a 100 percent Sustained Virologic Response (SVR) rate during clinical trials in about six weeks when it is administered jointly with Sovaldi. Clinical trials are under way to see if that time can be cut to four weeks. Some see that as a rationale for Gilead acquiring Achillion. Of course, the other three major HCV companies, AbbVie, Johnson & Johnson , and Merck & Co. , might compete for that acquisition, although it doesn’t seem likely that AbbVie would participate, as the company seems to be diversifying its portfolio into other areas.
This is not the first time it has been rumored Gilead might take aim at Achillion. In May, driven primarily by Twitter rumors, tweeters speculated an acquisition was pending because Gilead executives canceled a presentation at a health care investor conference only a day after Achillion executives canceled a presentation. It was nonsense, as it turned out.
“Let’s be realistic, Gilead isn’t buying Achillion,” wrote Adam Feurstein for The Street in May. “Gilead has no need to make defensive acquisitions and the incremental benefit from owning ACHN-3102 is small relative to the cost. Investors are pining for Gilead to acquire something, but not in hepatitis C, which is already (or will soon be) in a declining market precisely because of the company’s success.”
Another reason investors may be thinking Achillion is ripe for the plucking is that its has been on a fairly steady decline since the beginning of the year. Shares traded on Jan. 23, 2015 for $15.99, dropped to $11.08 on Feb. 5, and to $8.75 on April 30. They rose slightly on May 18 to $11.03, then dropped on June 12 to $8.24, then to $7.30 on Aug. 10. Shares are currently trading for $7.41.
