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Taking direct action
December 2011
by David Hutton  |  Email the author


BASEL, Switzerland—In an effort to broaden its portfolio of hepatitis drugs, Swiss drugmaker Roche has reached an agreement to purchase Anadys Pharmaceuticals for $230 million.
A key part of the sale is Anadys' drug Setrobuvir, a combination therapy for hepatitis C that would be taken in combination with other antivirals as part of a drug "cocktail." If clinical trials keep moving ahead as the company expects, Setrobuvir could gain the U.S. Food and Drug Administration's (FDA) approval and be available to patients by 2015, according to Anadys President and CEO Steve Worland.
"With Roche's considerable capabilities and experience in HCV, we believe this acquisition provides the best chance of success for the new potential treatments to reach patients," Worland adds.  
The deal may not be without its hurdles, with a lawsuit recently filed in an effort to block the proposed sale. New York-based law firm Faruqi & Faruqi LLP announced Oct. 19 it was investigating Anadys' board of directors.  
In a complaint filed in California federal court, shareholders said they would receive $3.70 per share of Anadys common stock under the terms of the deal announced on Oct. 17, even though according to Yahoo Finance, at least one analyst had set a price target of $4 per share.
The plaintiffs claim Anadys made misleading statements and material omissions in its Oct. 25 solicitation and recommendation statement to shareholders on the deal, alleging the company failed to explain why its board countered Roche's $3.70 per-share offer with a proposal for $4.50 a share on Oct. 7, only to accept Roche's original offer three days later on Oct. 10.
"Without the omitted and materially misrepresented information, Anadys' shareholders simply cannot make a fully informed decision as to whether to vote in favor of the proposed transaction," the plaintiffs state in their claim.
Legal maneuvering not withstanding, Setrobuvir's potential to be part of a future combination therapy against hepatitis C proved to be an attractive piece of the purchase for Roche.  
"Our aim is to offer physicians and hepatitis patients a powerful combination of therapies that bring us closer to a cure, even without the use of interferon," says Jean-Jacques Garaud, global head of Roche Pharma Research and Early Development. "Anadys' compounds provide additional modes of action that could lead to interferon-free treatment regimens without viral resistance."
Also in development at Anadys is an oral, small-molecule inducer of innate immunity. A new era of interferon-free hepatitis therapies would create both a short-term threat and a long-term opportunity for Roche. In 2010, the company made $1.8 billion from sales of Pegasys, but that drug loses patent protection in 2017 and a new wave of oral hepatitis therapies likely could become the new standard of care by then, sparing patients from interferon's flu-like side effects and delivery method by injection.  
As a result, Roche seems to be taking a proactive business approach, and Peter Sandbach, head of communications at Roche Partnering, notes that Setrobuvir is an effective inhibitor of HCV genotype 1, which is the most prevalent genotype in the United States and also one of the most difficult to treat.  
"HCV therapy is a market with significant unmet medical need," he says. "HCV therapy is evolving towards interferon-free, direct-acting antiviral (DAA) combinations. This acquisition will provide us with a portfolio representing multiple mechanisms of action." Setrobuvir, Sandbach explains, is a non-nucleoside polymerase inhibitor that represents an alternative mechanism of action to advanced HCV drug candidates already in Roche's portfolio such as danoprevir (a protease inhibitor) and mericitabine (a nucleoside polymerase inhibitor). 
"The combination of danoprevir, mericitabine and Anadys' programs provides an opportunity for a wholly owned, first-to-market, interferon-free combination therapy," he says. "Three direct- acting antiviral drugs, when used in combination, will likely lead to better efficacy, reduced potential for drug resistance, shorter treatment duration and fewer side effects than currently available treatments using combinations of protease inhibitors, ribavirin (Copegus) and injectable pegylated interferon (Pegasys)."   
Sandbach says Roche will maintain Anadys' San Diego-based operations long enough to effect an orderly transfer of programs, technology and records to the Roche Virology team in New Jersey.   
"We estimate this will take three to six months, and plan to work closely with the Anadys team throughout this period," he says. "Our goal will be to complete the transfer by end of first quarter of 2012."  
According to Sandbach, Roche has often looked upon external innovation as a cornerstone of its R&D strategy, and its track record in forming external partnerships, from in-licensing to acquisitions, demonstrates this.  
"We continue to look for the best innovation outside Roche that will strengthen our R&D portfolio—so this isn't a one-off [deal], it's an integral part of our strategy," he notes.   The ripple effects of the deal are already making their way through the industry.  
In a note to clients, JMP Securities analyst Liisa Bayko said she expects she expects more hepatitis drug developers to be acquired.  
"We anticipate more deal making in the hepatitis C virus space in 2012 as companies accrue longer-term safety data on the earlier stage assets in the pipeline," she wrote. Industry observers believe the deal could mean greater competition for the two recently approved hepatitis C drugs, Vertex's Incivek and Merck & Co. Inc.'s Victrelis. FDA regulators cleared both drugs for marketing in May.
Code: E121104



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