Gilead Sciences, Inc. (Nasdaq:GILD) and Pharmasset, Inc.
(Nasdaq:VRUS) announced today that the companies have signed a
definitive agreement under which Gilead will acquire Pharmasset for
$137 per share in cash. The transaction, which values Pharmasset at
approximately $11 billion, was unanimously approved by Pharmasset’s
Board of Directors. Gilead plans to finance the transaction with
cash on hand, bank debt and senior unsecured notes. The company
expects the transaction, when completed, to be dilutive to Gilead’s
earnings through 2014 and accretive in 2015 and beyond. Further
guidance will be provided when the transaction closes, which is
expected to be in the first quarter of 2012.
Pharmasset currently has three clinical-stage product candidates
for the treatment of chronic hepatitis C virus (HCV) advancing in
trials in various populations. The company’s lead product
candidate, PSI-7977, an unpartnered uracil nucleotide analog, has
recently been advanced into two Phase 3 studies in genotype 2 and 3
patients. Both studies will utilize 12 weeks of treatment with
PSI-7977 in combination with ribavirin. One study will compare this
all-oral regimen against 24 weeks of the standard-of-care pegylated
interferon/ribavirin in treatment-naïve patients, and the second
study will compare the all-oral regimen to placebo in
interferon-intolerant/ineligible patients. A third Phase 3 study in
genotype 1 patients will be initiated in the second half of 2012,
the design of which is dependent on the outcome of Phase 2 studies
which are evaluating PSI-7977 in various combinations in genotype
1-infected patients. If successful, this strategy could lead to an
initial U.S. regulatory approval of PSI-7977 in 2014. PSI-938, an
unpartnered guanosine nucleotide analog, is being tested in a Phase
2b interferon-free trial as monotherapy and in combination with
PSI-7977 in subjects with HCV of all viral genotypes. Mericitabine
(RG7128), a cytidine nucleoside analog, is partnered with Roche and
is being evaluated in three Phase 2b trials. Roche is responsible
for all aspects of the development of mericitabine.
“The acquisition of Pharmasset represents an important and
exciting opportunity to accelerate Gilead’s effort to change the
treatment paradigm for HCV-infected patients by developing all-oral
regimens for the treatment of the disease regardless of viral
genotype,” said John C. Martin, PhD, Chairman and Chief Executive
Officer of Gilead. “Pharmasset presented compelling Phase 2 data
earlier this month further characterizing the strong efficacy and
safety profile of PSI-7977. The compound, together with
Pharmasset’s other pipeline candidates, represents a strong
strategic fit with Gilead’s vision, pipeline and capabilities. This
transaction will serve to drive the long-term growth of our
business, and we look forward to working closely with the
Pharmasset team to advance a broad clinical program in HCV to
address the unmet needs of patients and the medical community.”
“We are excited to join together with Gilead, which shares our
commitment to providing HCV patients with new, highly efficacious
and safe oral therapies,” said Schaefer Price, President and Chief
Executive Officer, Pharmasset. “We are very encouraged by the data
from our Phase 2 studies of PSI-7977 and believe strongly in the
potential of this compound to be a component in the transformation
of the treatment of chronic HCV. Gilead’s established expertise and
leadership in the field of antiviral drug development and
commercialization, coupled with the company’s existing portfolio of
promising compounds for HCV, make this partnership an ideal step to
fully realize the potential of our promising molecules as part of
future all-oral combination therapies for millions of patients in
need around the world.”
Gilead’s research and development portfolio includes seven
unique molecules in various stages of clinical development for the
treatment of HCV. Pegylated interferon in combination with
ribavirin is currently part of the standard of care treatment for
patients with chronic hepatitis C. Gilead is focused on advancing
multiple compounds with different mechanisms of action and
resistance profiles in combinations that will support delivery of
an all-oral regimen that would eliminate the need for pegylated
interferon. Three separate all-oral Phase 2 studies are currently
ongoing, and Gilead expects clinical data from these studies to
become available in 2012 and early 2013. Pharmasset’s compounds are
complementary to Gilead’s existing HCV portfolio, and the
transaction will help advance Gilead's effort to develop an
all-oral regimen for the treatment of HCV.
Terms of the Transaction
Under the terms of the merger agreement, a wholly-owned
subsidiary of Gilead will promptly commence a tender offer to
acquire all of the outstanding shares of Pharmasset’s common stock
at a price of $137 per share in cash. Following successful
completion of the tender offer, Gilead will acquire all remaining
shares not tendered in the offer through a second step merger at
the same price as in the tender offer.
The consummation of the tender offer is subject to various
conditions, including a minimum tender of at least a majority of
outstanding Pharmasset shares on a fully diluted basis, the
expiration or termination of the waiting period under the Hart
Scott Rodino Antitrust Improvements Act, and other customary
conditions. The tender offer is not subject to a financing
condition.
The $137 per share price in the transaction represents an 89%
premium to Pharmasset’s closing share price on Friday, November 18,
2011, the last trading day prior to announcement, and 59% to
Pharmasset’s all time high closing stock price.
Gilead has received commitments from Bank of America Merrill
Lynch and Barclays Capital in connection with financing of the
transaction.
Barclays Capital and Bank of America Merrill Lynch are acting as
financial advisors to Gilead in the transaction. Morgan Stanley
& Co. LLC is acting as the financial advisor to Pharmasset.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel to Gilead and Sullivan & Cromwell LLP is serving as
legal counsel to Pharmasset.
Conference Call
Gilead will host a conference call today, Monday, November 21,
2011, at 8:00 a.m. Eastern Time, to discuss the proposed
acquisition. To access the live call, please dial 1-800-599-9829
(U.S.) or 1-617-847-8703 (international). The conference passcode
number is 61526607. Telephone replay is available approximately one
hour after the call through 11:00 a.m. Eastern Time,
November 24, 2011. To access, please call 1-888-286-8010 (U.S.) or
1-617-801-6888 (international). The conference passcode number for
the replay is 39677531. The information provided on the
teleconference is only accurate at the time of the conference call,
and Gilead will take no responsibility for providing updated
information.
About Pharmasset
Pharmasset is a clinical-stage pharmaceutical company committed
to discovering, developing and commercializing novel drugs to treat
viral infections. Pharmasset’s primary focus is the development of
oral therapeutics for the treatment of hepatitis C virus (HCV)
infection. Pharmasset’s research and development efforts are
focused on nucleoside/tide analogs, a class of compounds which act
as alternative substrates for the viral polymerase, thus inhibiting
viral replication.
About Gilead Sciences
Gilead Sciences is a biopharmaceutical company that discovers,
develops and commercializes innovative therapeutics in areas of
unmet medical need. Gilead’s mission is to advance the care of
patients suffering from life-threatening diseases worldwide.
Headquartered in Foster City, California, Gilead has operations in
North America, Europe and Asia Pacific.
Forward-Looking
Statement
This press release includes forward-looking statements, within
the meaning of the Private Securities Litigation Reform Act of
1995, that are subject to risks, uncertainties and other factors.
All statements other than statements of historical fact are
statements that could be deemed forward-looking statements,
including all statements regarding the intent, belief or current
expectation of the companies’ and members of their senior
management team. Forward-looking statements include, without
limitation, statements regarding business combination and similar
transactions, prospective performance and opportunities and the
outlook for the companies’ businesses, including, without
limitation, the ability of Gilead to advance Pharmasset’s product
pipeline or develop an all-oral antiviral regimen for HCV,
performance and opportunities and regulatory approvals, the
anticipated timing of data from clinical data; the possibility of
unfavorable results of the companies’ clinical trials; filings and
approvals relating to the transaction; the expected timing of the
completion of the transaction; the ability to complete the
transaction considering the various closing conditions; and any
assumptions underlying any of the foregoing. Investors are
cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and
uncertainties and are cautioned not to place undue reliance on
these forward-looking statements. Actual results may differ
materially from those currently anticipated due to a number of
risks and uncertainties. Risks and uncertainties that could cause
the actual results to differ from expectations contemplated by
forward-looking statements include: uncertainties as to the timing
of the tender offer and merger; uncertainties as to how many of
Pharmasset’s stockholders will tender their stock in the offer; the
possibility that competing offers will be made; the possibility
that various closing conditions for the transaction may not be
satisfied or waived, including that a governmental entity may
prohibit, delay or refuse to grant approval for the consummation of
the transaction; the effects of the transaction on relationships
with employees, customers, other business partners or governmental
entities; other business effects, including the effects of
industry, economic or political conditions outside of the
companies’ control; transaction costs; actual or contingent
liabilities; and other risks and uncertainties detailed from time
to time in the companies’ periodic reports filed with the
Securities and Exchange Commission, including current reports on
Form 8-K, quarterly reports on Form 10-Q and annual reports on Form
10-K. All forward-looking statements are based on information
currently available to the companies, and the companies assume no
obligation to update any such forward-looking statements.
Additional Information and Where to
Find It
The tender offer described in this document has not yet
commenced. This announcement is neither an offer to purchase nor a
solicitation of an offer to sell shares of Pharmasset. At the time
the offer is commenced, Gilead will file a Tender Offer Statement
on Schedule TO with the U.S. Securities and Exchange Commission,
and Pharmasset will file a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the offer. Pharmasset stockholders
and other investors are urged to read the tender offer materials
(including an Offer to Purchase, a related Letter of Transmittal
and certain other offer documents) and the
Solicitation/Recommendation Statement because they will contain
important information which should be read carefully before any
decision is made with respect to the tender offer. The Offer to
Purchase, the related Letter of Transmittal and certain other offer
documents, as well as the Solicitation/Recommendation Statement,
will be made available to all stockholders of Pharmasset at no
expense to them. The Tender Offer Statement and the
Solicitation/Recommendation Statement will be made available for
free at the Commission's web site at www.sec.gov. Free copies of
these materials and certain other offering documents will be made
available by Gilead by mail to Gilead Sciences, Inc., 333 Lakeside
Drive, Foster City, CA 94404, attention: Investor Relations.
In addition to the Offer to Purchase, the related Letter of
Transmittal and certain other offer documents, as well as the
Solicitation/Recommendation Statement, Gilead and Pharmasset file
annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may
read and copy any reports, statements or other information filed by
Gilead or Pharmasset at the SEC public reference room at 100 F
Street, N.E., Washington, D.C. 20549. Please call the Commission at
1-800-SEC-0330 for further information on the public reference
room. Gilead’s and Pharmasset’s filings with the Commission are
also available to the public from commercial document-retrieval
services and at the website maintained by the Commission at
www.sec.gov.
For more information on Gilead Sciences, please
visit the company’s website at www.gilead.com or call Gilead Public
Affairs at 1-800-GILEAD-5 or 1-650-574-3000.
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