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Gilead to buy biotech firm Pharmasset for $11 billion

November 21, 2011

Gilead Sciences Inc struck a deal to buy biotechnology company Pharmasset Inc for about $11 billion in a huge bet to diversify its portfolio with new hepatitis C treatments.

Gilead, the world's largest maker of HIV drugs, will pay $137 per share for each Pharmasset share, an 89% premium to Pharmasset's Friday closing price.

Pharmasset has been one of the hottest biotech stocks in the last year based on the potential of its experimental hepatitis C medicines to create a treatment regimen for the liver disease without commercially manufactured interferons.

Interferons are proteins that help the body's immune system respond to viruses and other invaders, but they often cause flu-like side effects that lead many hepatitis C patients to stop or delay treatment.

"Gilead is making a pretty smart acquisition here," said Brian Skorney, an analyst with Brean Murray, Carret & Co. "It's definitely a high-risk acquisition, but I think it could pay off in dividends for them."

Skorney said it was possible that another bidder could emerge, noting that Roche Holding AG has a partnership with Pharmasset. Bristol-Myers Squibb, Johnson & Johnson and Merck & Co also sell or are developing hepatitis medicines.

Pharmasset has three hepatitis C medicines in clinical trials. Its lead candidate, PSI-7977, was recently advanced into two Phase III studies. Gilead said it expects PSI-7977 will be submitted for U.S. approval in the second half of 2013.

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