Gilead Sciences (NASDAQ: GILD ) shareholders better hope the Foster City,
Calif., company's planned acquisition of Pharmasset (NASDAQ: VRUS ) pays off
and in a big way. After all, Gilead lost more than 10% of its market value
Monday after announcing that it was buying Pharmasset for $11 billion. Gileads
$137-a-share bid represents nearly a 90% premium over Pharmasset's closing
price last Friday. Princeton, N.J.,- based Pharmasset is trading at about $134
today. Some industry observers think Gilead is overpaying. Pharmasset was an
attractive company, noted the online site 24/7 Wall St, but this one seems like
Gilead is spending above and beyond a normal amount here to close this deal. Not
surprisingly, Gilead begs to differ, citing the opportunity to "change the
treatment paradigm" for patients with infected with hepatitis C, said CEO John
C. Martin in a company news release. Martin was referring to Pharmasset's
hepatitis C treatments that have to potential to do away with the need for
interferon and marshal in a new standard of care for a disease that affects an
estimated 180 million people worldwide. Pharmasset is studying the first oral
treatment for hepatitis C, which would obviate the need for the injections of
interferon that accompany current therapy, thus eliminating nasty side effects.
Eyeing a potential 2014 approval, Pharmasset has its oral therapy in two
late-stage studies, with a third to begin in the second half of 2012. If the
oral therapy does make it to market, look for it to take a huge chunk out of the
sales of
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