Biotech Values

[DewDiligence]

>...my VIRS [Triangle Pharmaceuticals] was snatched away by big, bad Gilead.<

When GILD’s acquisition of Triangle was announced almost exactly six years ago, the acquiring company was small, upstart Gilead, not the behemoth we know today. (GILD’s market cap has appreciated more than fivefold since then.)

I agree with your contention that GILD made out like bandits, but this does not imply that Triangle shareholders got screwed.

The GILD-VIRS merger is one of the foremost instances in biotech where 1+1 turned out to be much more than 2. (In most mergers, 1+1 turns out to be 1.5-1.8, IMO.)

Emtriva by itself would’ve been at best a niche standalone drug for Triangle or any company other than GILD. However, GILD recognized a rare opportunity to supplant an existing blockbuster (GSK’s Combivir) by combining two relatively unknown drugs—Viread and Emtriva—into a single qD pill (Truvada).

GILD reasoned that, in due course, Truvada would become a colossal success because: i) Viread and Emtriva would prove to be pharmacologically synergistic*; and ii) Patients would gravitate en masse to a single qD pill that was capable of serving as the backbone for most, if not all, HIV cocktails in the treatment-naïve setting.

GILD’s assessment was spot-on from both a medical and a business standpoint. Although it might seem like an obvious move in hindsight, it was far from obvious then, IMO.

*One is a purine analog and one is a pyrimidine analog; Combivir consists of two pyrimidine analogs.