Merck Is Shopping for Smarts In Hep C

When the dust finally settles in the battle for preeminence in the hepatitis C market, Merck (NYSE:MRK) aims to be on top. And the company has made it clear it will do anything and everything to make certain it emerges as the leader in a market that could approach $20 billion worldwide by 2020.

“We would consider small deals to large deals — whatever is necessary to lead in hepatitis,” Roger Pomerantz, the drugmaker’s worldwide head of licensing and acquisitions, said in an interview this week at the J.P. Morgan Healthcare Conference in San Francisco, according to Bloomberg.

Merck’s willingness to pull out all the stops in the hepatitis C race could mean the company has its sights set on one of the two small drug developers in the field that haven’t already been gobbled up. As we noted in an article earlier this week, the two companies are Idenix Pharmaceuticals (NASDAQ:IDIX) in Cambridge, Mass., and New Haven, Conn.-based Achillion Pharmaceuticals (NASDAQ:ACHN).

Shares of both companies have risen substantially this week following Bristol-Myers Squibb’s (NYSE:BMY) announcement last weekend that it is buying hepatitis C drug developer Inhibitex (NASDAQ:INHX) for $2.5 billion. Back in late November, Gilead Sciences (NYSE:GILD) fired the first shot in the acquisition wars by agreeing to pay $11 billion to purchase Pharmasset (NASDAQ:VRUS), which is testing the first oral treatment for the disease.

The buying spree has been sparked by the need to find better ways to treat the huge numbers of people with the blood-borne disease, which can lead to liver cirrhosis and cancer, according to the Centers for Disease Control & Prevention in Atlanta. The World Health Organization estimates that as many as 170 million people worldwide have hepatitis C.

Things were looking promising for Merck in May when it received approval to market Victrelis, the first new hepatitis C treatment in a decade. But the drug enjoyed center stage for only a short time. Only 10 days after  Victrelis got the O.K., the FDA gave a thumbs-up to a Vertex Pharmaceuticals‘ (NASDAQ:VRTX) rival treatment, called Incivek, which has outperformed the Merck drug in the marketplace by a wide margin.

Although both the Merck and Vertex medications are better than traditional treatments, they also share a major drawback: They must be used with interferon injections, which have undesirable side effects. What all the acquirers are after is a hepatitis C treatment that does not require interferon.

Merck is in Phase II testing of another drug that may be effective against all strains of hepatitis C. The experimental treatment, MK-5172, is intended to be part of an interferon-free regimen, Merck spokesperson Ian McConnell told InvestorPlace. Licensing chief Pomerantz said MK-5172 has the potential to serve as the “foundation medicine” for future combination-pill treatments.

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