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Why Gilead Sciences, Inc. (GILD) Should Buy Out Achillion Pharmaceuticals, Inc. (ACHN)

Achillion Pharmaceuticals, Inc. (NASDAQ:ACHNGilead Sciences, Inc. (NASDAQ:GILD)

Yesterday, major rumors started to fly around in market talk that Gilead Sciences was planning on acquiring Gilead Sciences. The rumors started because both ACHN and GILD were believed to have missed the UBS conference scheduled yesterday. While some may be pointing to the fact that Gilead Sciences will be appearing at the conference today as a way to debunk the rumors, I’m not completely certain that acquiring ACHN at present times would be a bad idea for GILD, or ABBV for that matter. Here’s why…

Gilead Would Buy Achillion At A Steal

Unfortunately for Achillion Pharmaceuticals investors, the stock has seen nothing but downtrends over the last few months. As a matter of fact, the stock just recently hit the floor yesterday. So, if Gilead Sciences were to make a move to acquire Achillion right now, they’d get a steal of a deal. However, pricing isn’t the only reason that GILD would want to acquire ACHN.

Blocking Competition Is Never A Bad Thing

Another reason that some investors still think a deal may be in the works is simple. Gilead Sciences purchasing Achillion would be a great way for them to block up and coming rivals in the hepatitis C market; like AbbVie Inc. The reality is that if Achillion continues producing their hepatitis C treatment, this could open the door for ABBV, and other competition to potentially own drugs that could threaten the company’s dominance in the market. Therefore, by acquiring ACHN, GILD would in essence block competition!

GILD Could Buy ACHN For Its NS5A Inhibitor

Achillion has worked to develop a NS5A inhibitor; known as ACHN-3102. While the inhibitor is still in the testing phase, it is believed that it could be more potent and broadly active when compared to Gilead Science’s NS5A inhibitors. One of which is an approved component of Harvoni that’s called Ledispavir, and the other is an experimental inhibitor known as GS-5816. If GILD was to acquire ACHN, they could use the possibly more potent inhibitor to make their own medications better.

The Big Argument Against The Acquisition

The big argument against the acquisition seems to be the idea that investors want to see Gilead Sciences make a big move, but not in the hepatitis C space. As the leader there already, many investors believe that GILD would benefit very little from purchasing another hep C focused company. Therefore, these investors think that if GILD was going to buy anything, it would most likely be a company like Vertex Pharmaceuticals Incorporated that has a strong focus on cystic fibrosis.

Nonetheless, There Has Been No Clear Answer

While a Gilead Spokesman has announced that they will be attending an engagement at the UBS conference today; rescheduled from yesterday, the company hasn’t debunked the rumor. So, right now, the truth is up in the air.

  • skwirrl

    reasons to buy – 3102. It’s better than Gild’s current NS5A. AND using it with Sovaldi eliminates Gild’s exposure in the Abbvie patent troll lawsuit. (Abbvie has patents on neither of the drugs in the case, but it is still allowed to patent their potential uses together and did so) This suit might take a decade and change patent law… But Abbvie very well could win on technicalities despite their acting deceitfully and in bad faith.

    Other reason – There are 3 Nucs in the world right now. Sovaldi, Merck’s and the one being developed by Achillion. Abbvie doesn’t have one and as such it’s fallen almost completely out of the race. If Achillion’s pans out, I could see Abbvie definitely making a play and immediately eating up market share.

    If Gild bought ACHN, it’s like buying insurance when the dealer is showing an ace. You might not win but you can still get paid. Keeping those drugs in your house would serve many purposes. Gild is printing money and will continue to do so. 5B is 1 QUARTERS PROFIT from Harvoni right now. If this secures them lions share of the market for a decade the purchase would be worth 20+B.

  • artfuldgr

    guess you guys missed the J&J information…
    not a great author to submit the piece post 1.1 billion deal…
    kind of useless now…

  • PVC

    Yesterday, major rumors started to fly around in market talk that Gilead Sciences was planning on acquiring Gilead Sciences.

    REALLY? Are there no editors or proofreaders at SmarterAnalyst? ON THE VERY FIRST LINE???

    Ugh.