Important events don't always seem so important when they first occur. That could be the case with Gilead Sciences' (NASDAQ:GILD) announcement on Tuesday that it was buying Phenex Pharmaceuticals' development program for nonalcoholic steatohepatitis, or NASH. Gilead's shares rose slightly -- but not enough to raise any eyebrows. Could this deal be one that leads to Gilead's next blockbuster drug? 

Source: Gilead Sciences

Lessons from the past
Gilead stirred things up in the biotech world back in 2011 with the $11 billion buyout of Pharmasset. Many Wall Street observers thought that the price was too high. Gilead, though, saw the potential in Pharmasset's hepatitis C program. 

That hepatitis C program that the biotech wanted so badly included the drug now known as Sovaldi, which gained FDA approval in December 2013. In its first nine months on the market, Sovaldi generated revenue topping $8.5 billion. In hindsight, Gilead's purchase was ridiculously smart despite the high price tag. 

The cost of Gilead's latest deal is much lower. Privately held Phenex Pharmaceuticals received an undisclosed upfront payment plus the potential for milestone-based payments down the road. Gilead stated that the total package could be worth up to $470 million. That's a lot of money, but only chump change if the NASH program eventually produces a blockbuster drug. 

The NASH dash
Several biotechs are racing to cross the finish line and reach the market first with a drug to treat NASH. Intercept Pharmaceuticals was thought to have captured Gilead's fancy with its NASH drug obeticholic acid, which met its primary endpoint in a phase 2 clinical trial. Gilead's decision to buy Phenex's program resulted in Intercept's shares plunging over 10%. 

Raptor Pharmaceuticals lags behind a bit with its drug RP103, which is in a phase 2 trial for treating NASH in children. Results for the phase 2b part of this study are anticipated in the second half of 2015. 

Why the big NASH dash? The chronic liver disease affects an estimated 2% to 5% of Americans and is the third leading cause of liver transplants in the U.S. There is no currently approved treatment. NASH represents a market large enough to create the potential for another blockbuster drug. 

Gilead's next big thing?
Of course, it remains to be seen which company will emerge as the big winner in NASH. With the Phenex deal, Gilead now has its own Farnesoid X Receptor antagonist with which to battle Intercept. Raptor isn't so far behind that it couldn't make a splash.

This does appear to be yet another smart move by Gilead, though. Adding a NASH drug fits well into the company's broader focus on liver diseases. Making a play for Intercept would have been much more costly than buying Phenex's NASH program. Gilead's recent deal might not lead to its next blockbuster drug -- but then again, it just might.