California-based pharma developer Gilead Sciences announced on November 21 that it would step heartily into the hepatitis market with the $11 billion all-cash acquisition of Princeton-based Pharmasset, a developer of oral treatments for hepatitis C and other viral diseases. Under the terms of the deal, Gilead will pay $137 per share of Pharmasset, which is almost 90 percent higher than the price at which the stock closed the prior Friday.

Pharmasset was founded in Atlanta in 1998 and moved to Princeton in 2002. In 2007 it moved into a 30,000-square-foot space at 303 College Road, in Princeton Forrestal Center. The company employs 65.

In recent years the company’s cachet has grown thanks to a steady input of federal government dollars and clinical trials that have shown almost universally good results for hepatitis patients. Its stock value, according to the company, has risen roughly 240 percent since the beginning of the year, even though it reported a $91 million loss for the year as of September 30 and revenues of $897,000 (the company has no products on the market). In 2010 Pharmasset made a public offering that raised almost $93 million, just three months after another public offering that raised $30 million.

Gilead, the world’s largest maker of HIV drugs, has been building itself into a powerhouse through a series of acquisitions — 10 since 2006, including Pharmasset — but the Pharmasset deal is its largest ever. The company already has several hepatitis C drugs in its quiver, but said that Pharmasset’s medicines — particularly its PSI-7977, which performed well in two recent Phase III trials — complement and expand upon Gilead’s store of injectible hepatitis drugs.

Gilead admitted that the deal would put the company in the red through 2014, but said it foresees major growth in the hepatitis drug market. It expects to see profits return in 2015. The deal is expected to close in the first quarter of 2012.

#b#Pharmasset Inc.#/b#, 303-A College Road, Princeton 08540; 609-613-4100; fax, 609-613-4150. P. Schaefer Price, CEO.

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