It's been a rocky road for hepatitis C drugmaker Idenix Pharmaceuticals (UNKNOWN:IDIX.DL), but investors are smiling after Merck (NYSE:MRK) announced on Monday that it's buying the biotech for $3.85 billion, more than a 230% premium on Friday's closing price. Even investors who bought at the previous top a few years ago when investors had high hopes that every hepatitis C biotech was going to get bought still had a profitable ending.
Fellow hepatitis C drugmaker Achillion (NASDAQ:ACHN) was up big yesterday, with investors hoping that it'll get bought out as well, but investors should be careful here; there are diminishing potential returns as each hepatitis C drugmaker gets picked off. With Merck now owning Idenix Pharmaceuticals, there's one less company that might want to purchase Achillion.
Gilead Sciences (NASDAQ:GILD) traded down, presumably because investors are worried that Merck will become a stronger competitor with Idenix's assets, but there is upside for Gilead Sciences' investors: Merck's purchase is a sign that the pharma thinks there will be plenty of patients a few years from now, when Idenix Pharmaceuticals' drugs could make it to market.
Watch the following video for thoughts on the deal from senior biotech specialist Brian Orelli and health-care analyst David Williamson, including the potential wildcard: patents.