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Pharmasset Acquired, Shares Jump 85%

By Dave Williamson - Updated Apr 6, 2017 at 5:33PM

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Gilead Sciences buys Pharmasset and hepatitis C drug PSI-7977.

Congratulations, Pharmasset (Nasdaq: VRUS) investors, you almost pulled off an overnight double as Gilead Sciences (Nasdaq: GILD) fired a shot across the bow of other hepatitis C drug makers.

For $11 billion, a 59% premium above Pharmasset's all-time high, Gilead is getting PSI-7977, an oral treatment that doesn't require interferon injections and their nasty side effects. This is potentially a huge improvement over the current standard of care, such as recently approved drugs like Vertex Pharmaceuticals' (Nasdaq: VRTX) Incivek and Merck's (NYSE: MRK) Victrelis.

It's no surprise that Vertex is down 3% as of this writing and that Inhibitex (Nasdaq: INHX), with its oral hep-C candidate INX-189, is up 25%. INX-189 has shown excellent data so far, but it hasn't entered phase 3 trials yet. Oddly, Achillion (Nasdaq: ACHN), with three hep-C drugs in development, is up only 3%, but the stock saw shares pop last week when the company's CEO got the market excited about a potential buyout. And on a day when the Dow Jones Industrial Average (INDEX: ^DJI) is down 316 points, being up is no small feat.

For Gilead, this is not an indictment of its own stable of hep-C drug candidates. The future of treatment of this disease will be drug cocktails, similar to Gilead's HIV treatments Atripla and the upcoming Quad. Pharmasset already had deals with Bristol-Myers Squibb and Johnson & Johnson to create combo products. Now Gilead will potentially get a cut of those products' sales, and also the chance to boost its own higher-margin offerings' chances of success.

The multibillion-dollar race for hepatitis C treatment supremacy is well under way. The best way to track the latest developments surrounding the companies mentioned above is to add them to our free My Watchlist feature:

If you think the billions at stake in hepatitis C treatments are a big deal, wait until you read The Motley Fool's special free report, "The Next Trillion Dollar Revolution." Don't miss out on your chance to profit from this massive market opportunity.

David Williamson owns shares of Johnson & Johnson, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Gilead Sciences, Johnson & Johnson, and Vertex Pharmaceuticals. Motley Fool newsletter services have recommended creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
GILD
$66.33 (0.18%) $0.12
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$90.59 (-0.01%) $0.01
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$34,152.01 (0.71%) $239.57
Vertex Pharmaceuticals Incorporated Stock Quote
Vertex Pharmaceuticals Incorporated
VRTX
$303.00 (-0.83%) $-2.53
Achillion Pharmaceuticals, Inc. Stock Quote
Achillion Pharmaceuticals, Inc.
ACHN

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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