Replies to post #30856 on Biotech Values

[rkrw]

I think nvs flat out way overpaid for idix at least on the hcv side which was the driver of the deal. They were probably bidding against themselves like the New York Yankees tend to do.

The deal was over the top imo, huge payments to the private shareholders and huge bonus money to those private shareholders if the hcv drug work out (I don't recall if they get bonus money for the hbv drug). That deal was several years ago as well.

The only recent deal I know of which was more lucrative than vrtx/jnj was the Fibrogen/Astellas hif-1 alpha deal. And they were actually structured quite similarly. By retaining the US as Fibrogen did as well and getting US like terms for the rest of the world, I like the deal better than the idix deal. The key to maximizing the products downstream economics to VRTX was retaining the U.S.

nvs is sure to make a move into the protease field soon enough. Maybe they have internal programs or maybe they'll pull one in. After spending a $1B or more on hcv they won't cede the protease opportunity just because they passed or lost out on 950.

[Praveen]

Dew/Vertex,

I am not sure if I can convince you regarding comparing Vertex and Idenix.But I will try one last time :-).

I can't understand why you want to compare Vertex and Idenix deals. Nobody here or the analysts are’nt comparing their HCV drugs or their deals.

See the following messages:

http://www.siliconinvestor.com/readmsg.aspx?msgid=22586653

http://www.siliconinvestor.com/readmsg.aspx?msgid=22586918

http://www.siliconinvestor.com/readmsg.aspx?msgid=22587332

You compare a Protease inhibitor like VX950 with another Protease inhibitor from Schering plough's SCH 503034 which are in the same class and MOA. See in this paragraph below from Merril's:

“We would look to review our rating on Vertex, pending data from the PROVE 1/2 studies, and updates for competing HCV protease inhibitors (e.g., additional dose ranging data for SCH 503034, Schering Plough’s HCV protease inhibitor).”

What ever Vertex's VX 950 efficacy is, It still has a lot of risk with toxicity and SVR. So getting a partner like Tibotec(JNJ) with experience in manufacturing capability with 100% North american rights(More than 3M pts) and mid 20's royalty rates for the rest of the world, 545M $ in milestone payments is an amazing deal for Vertex. The street seems to like it n it is up by 15% roughly today.

If you still want to compare with the Idenix deal, which I am not interested to compare the two, here are Merill's comments:

“The upfront terms for VRTX’s ex-US deal appear to be higher than the global hepatitis C deals announced for Human Genome Sciences’ Albuferon with Novartis (see HGSI notes from June 6 and 7 for details), and Idenix Pharmaceuticals’ valopicitabine (NM 283) also with Novartis. The deal also reduces the need for VRTX to seek additional equity/debt financings.”

Sometime ago you were comparing Anadys which stimulates the body to produce its own natural interferon and Idenix's NM283 which is a polymerase inhibitor. Hcv space is very open and a big unmet one and you have to wait to see the various combinations which work the best. It is not a First come take all or a Winner take all scenario.

I am not critisizing Novartis here. I said they didn't place their bets well in the HCV space. In one of my previous posts I wrote I like Novartis and there is a sea of difference between Novartis n Pfizer research presentations if you remember.

Regards,
Praveen