Decision Resources Group analyst’s view on Merck’s decision to acquire Idenix

Given the huge potential, and interest in, the hepatitis treatment market, and US pharma giant Merck & Co’s (NYSE: MRK) recent decision to acquire Idenix, here is a new take on the issues from market research firm Decision Resources Group analyst Seamus Levine-Wilkinson.

Why Merck’s acquisition of Idenix was a risky one

The history of hepatitis C virus (HCV)-specific nucleotide polymerase inhibitors is replete with drugs that either failed to work or were associated dangerous side effects. For instance, in early 2012 Bristol-Myers Squibb (NYSE: BMY) bought a company called Inhibitex for $2.5 billion. This acquisition came shortly after B-MS failed to acquire Pharmasset (the company that developed sofosbuvir) and was clearly a play to get their own nuc (INX-189) to compete directly with Gilead Sciences (Nasdaq: GILD). Sadly, Inhibitex’ lead “nuc” was toxic and led to fatalities in some patients that forced B-MS to write off the entire deal.

At $3.85 billion, Merck is paying a very high price for Idenix in order to acquire two nucleotides that are still in Phase I development and less than 100 patients have been exposed to these agents for short durations, the analyst opines. “Given the history of this class of drugs we have to assume a relatively low likelihood of success for these agents and, at this acquisition cost, a failure would be financially very damaging for Merck,” he said.

It is important to note that Idenix previously had a promising nuc, IDX-184, that was put on a partial clinical hold not long after Inhibitex’ INX-189 nuc was halted owing to similarities in chemical structure. This highlights the risk inherent in this acquisition since there was no direct evidence that IDX-184 was toxic (ie, cardiac and renal testing did not show any signs that IDX-184 toxicity), it just happened to get caught up in the Food and Drug Administration’s re-evaluation of all nucs. Bottom line is that there is going to be a lot of scrutiny around this particular class of compounds and the FDA has already shown that it has a short leash when it comes to issuing clinical holds for safety signals from this class of compounds. This is especially true now that sofosbuvir is on the market and there is no longer a clear unmet need for an HCV-specific nuc.