Merck & Co. may consider acquisitions as part of hepatitis C strategy

Merck & Co.’s global head of licensing and acquisitions Roger Pomerantz said the company may pursue takeovers to reach its goal of becoming “a leader in hepatitis C” treatments. “We will do what it takes to get there,” Pomerantz remarked, adding that the drugmaker “would consider small deals to large deals, whatever is necessary to lead in hepatitis.”

Last year, the FDA approved Merck’s Victrelis (boceprevir), making the oral protease inhibitor the first in a new class of drugs approved to treat the disease. The company is also developing MK-5172, which is in mid-stage testing and may work against all strains of the virus. Head of research Peter Kim added that Merck expects the agent to be the “cornerstone” of an all-oral regimen to treat hepatitis C.

Other companies are also trying to develop such regimens, prompting a recent number of deals between drugmakers who are active in the hepatitis C field. In November, Gilead Sciences agreed to acquire Pharmasset for approximately $11 billion, gaining access to the latter’s uracil nucleotide analogue PSI-7977. In addition, Bristol-Myers Squibb earlier this month said it will pay around $2.5 billion to buy Inhibitex, which is developing the nucleotide polymerase inhibitor INX-189.

Kim noted that Merck could take one of three approaches to pursue an all-oral regimen. The company may look to combine MK-5172 with some of its other experimental drugs in earlier stages of testing, he suggested. Kim said the drugmaker may also choose to collaborate with other companies by combining MK-5172 with other compounds in development, including a “potential acquisition of assets that might be out there.” If it’s not possible to collaborate, Merck would study MK-5172 in combination with other new drugs when they reach the market, Kim remarked. The executive noted that Merck was “looking into” developing a nucleotide analogue similar to Pharmasset and Inhibitex’s experimental drugs, and would address that topic at a later date.

Separately, Merck CEO Ken Frazier indicated that the company’s merger activity will focus on its 11 main therapeutic areas. He said Merck wasn’t looking at large deals, although it weighs each acquisition opportunity on its own merits. The CEO noted that early-stage drug development companies are the “sweet spot” for acquisitions because once compounds reach mid- or late-stage testing, “bidding gets more intense.”

Frazier said that in addition to using funds for acquisitions, the company plans to return “even more cash to shareholders” this year. “There’s both room and ambition for additional shareholder value,” he remarked. Frazier added that “despite the Singulair patent expiration” in 2012, the company won’t be “talking about a trough year. We’re not trying to set a floor or low expectations for this year.” The drugmaker is scheduled to release 2012 financial guidance on February 2.