Inhibitex Is an Instant Double

It looks like some wishes do come true. Inhibitex (Nasdaq: INHX  ) investors hoping for a lucrative buyout had their dreams realized today.

Bristol-Myers Squibb (NYSE: BMY  ) announced over the weekend it was purchasing the small hepatitis C-focused biotech for $2.5 billion. The $26-per-share deal represents more than a 160% premium from Friday's close of $9.87 and a 58% premium to Inhibitex's all-time high. This is fitting, since it mirrors the 59% premium Gilead Sciences (Nasdaq: GILD  ) paid above Pharmasset's (Nasdaq: VRUS  ) all-time high. And it's also fitting since that bit of hep C-focused M&A is what pushed Inhibitex's shares soaring to that high as the market anticipated more action in the space.

What makes Bristol's offer so startling is that Inhibitex's headline drug, INX-189, is only through phase 1 clinical trials. Granted, it posted some exciting efficacy data, but it is behind Pharmasset's PSI-7977 and still has a long, long way to go before FDA approval. Obviously, Pharmasset was a much larger company with a more extensive pipeline, so the total dollar value paid by Gilead was significantly higher, but what both of these deals show is how excited the major drug companies are about these next-gen hep C treatments.

The biggest loser here is likely Vertex Pharmaceuticals (Nasdaq: VRTX  ) . It effectively beat out Merck in a David-and-Goliath struggle for the current best-in-class hep C treatment. Unfortunately, its instant blockbuster, Incivek, may be cut short if these new oral medications that don't require interferon and its nasty side effects prove as safe and effective. Given the large amount spent acquiring, Big Pharma thinks that is a likely outcome.

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