The weekend sale of Alpharetta-based Inhibitex to pharmaceutical powerhouse Bristol-Myers Squibb for $2.5 billion is one of the largest development-stage deals ever, an analyst who follows Inhibitex said.
Inhibitex, which is developing a treatment for hepatitis C, was offered $26 a share for its business -- a 163 percent premium over the Friday closing price of $9.87. Monday, Inhibitex shares rose to $23.70.
“It’s one of the top 10 largest development-stage deals ever done,” said Brian Skorney, a research analyst with Brean Murray Carret & Co. “Only 11 or so deals have been $1 billion or more.”
A Bristol-Myers Squibb spokeswoman said the company does not yet know whether jobs at Inhibitex will stay in Alpharetta, move elsewhere or be eliminated. The company had 33 full-time employees as of last March; 25 of them were in in research and development.
Brian Williamson, assistant commissioner of Georgia’s Department of Community Affairs, said he hopes the sale will mean more research jobs in Georgia.
Inhibitex received the first loan the state Department of Community Affairs made under its Life Sciences Facilities Fund, Williamson said, in December 2004 for $2.5 million. Williamson said while the state has had other successes through the program, Inhibitex has been the biggest in terms of the business’s value. Inhibitex paid back its loan on time.
“It’s a tremendous success, and we’re thrilled to see it happen,” he said.
The deal is the latest in a series of acquisitions by major players in the pharmaceutical industry. Each is looking to extend its revenue-generating product pipeline and capitalize on the potential market for a new form of hepatitis C treatment.
Last October, Roche bought Anadys Pharmaceuticals for $230 million. Gilead Sciences is about to close an $11 billion deal for Pharmasset struck in November.
Two other hepatitis C drug developers, Achillion and Idenix, remain independent, and industry speculation is that they will be the subject of similar interest.
A next-generation oral therapy, as opposed to shots, for hepatitis C could be a business worth more than $10 billion, by some estimates, offering companies that possess such a drug tremendous opportunity.
Skorney said the Inhibitex purchase is a risk, as not all drugs that look promising end up working as intended. But, he added, “The sheer potential has a lot of these pharmaceutical companies salivating.”
For Bristol-Myers, a new in-demand drug would help fill the revenue vacuum created by the upcoming expiration of patent protection for top-sellers such as blood thinner Plavix. The company has been actively buying small companies to build its drug development.
Inhibitex has had its struggles. The company reported revenue of $1.9 million in 2010 and a loss of $22.7 million. John Kingery, the Department of Community Affairs’ chief underwriter, said many similar companies that do research and development but don’t yet have a product to sell are in similar situations.
Inhibitex’s hepatitis C drug is still being tested, and is not yet for sale.
Charles Craig, president of Georgia Bio, said the purchase shows that companies that begin in Georgia can be successful on a larger scale. Talking about the state’s successes, he said, can make it easier to bring other start-ups in the future.
Much of the research on hepatitis C has come out of Georgia, Craig said. In addition to Inhibitex’s work, Pharmasset -- which sold in November -- was started by an Emory University professor.
“It just shows Georgia is a leading center of innovation when it comes to biotech drug development,” Craig said . “It shows Georgia is leading the pack.”
About the Author
