Gilead Sciences Buying Pharmasset For $11B

FOSTER CITY, Calif. (AP) -- Gilead Sciences Inc. said Monday that it has agreed to pay about $11 billion for drug developer Pharmasset Inc. in a huge bet on its experimental hepatitis C treatments. The offer is an 89 percent premium over the stock's latest closing price.

Pharmasset, based in Princeton, N.J., currently has no products on the market but is developing potential treatments for a disease that is expected to become a larger public health problem as baby boomers get older.

Hepatitis C is a viral infection that often has no symptoms and can lead to life-threatening liver damage. It is the primary cause of liver transplants in the United States.

Hepatitis C is spread through the blood. That can happen through needle sharing or having sex with an infected person. The disease could also be picked up from blood transfusions before 1992, when testing of the blood supply for the virus began.

Gilead said it will pay $137 per share in cash for each Pharmasset share. The stock closed at $72.67 on Friday, and climbed $62.33, or 86 percent, to $136 in pre-market trading on Monday. Gilead shares dropped $1.98, or 5 percent, to $37.90.

The Pharmasset board unanimously approved the deal, which will be made in the form of a tender offer for the stock.

Schaefer Price, president and CEO of Pharmasset, said Gilead's "established expertise and leadership in the field of antiviral drug development and commercialization" makes it a good match for Pharmasset.

Pharmasset shares climbed earlier this month after the company said it had started late-stage clinical testing of an experimental hepatitis C drug labeled PSI-7977. The company will run a 12-week study that treats hepatitis C with a combination of PSI-7977 and ribavirin, both of which are given orally.

Pharmasset plans to start two other late-stage trials in 2012 and hopes to file for marketing approval of PSI-7977 in the United States and European Union in the second half of 2013.

Pharmasset's regimen could become a preferred option for hepatitis C if studies show it works as well as drug cocktails containing the intravenous drug interferon. Dosing the drug would be more convenient, and it could have fewer side effects because it does not include interferon.

Gilead, which is based in Foster City, Calif., said it will pay for the deal with cash on hand, bank debt and senior unsecured notes. It expects the acquisition to close in next year's first quarter.