It looks like some wishes do come true. Inhibitex (NAS: INHX) investors hoping for a lucrative buyout had their dreams realized today.

Bristol-Myers Squibb (NYS: BMY) announced over the weekend it was purchasing the small hepatitis C-focused biotech for $2.5 billion. The $26-per-share deal represents more than a 160% premium from Friday's close of $9.87 and a 58% premium to Inhibitex's all-time high. This is fitting, since it mirrors the 59% premium Gilead Sciences (NAS: GILD) paid above Pharmasset's (NAS: VRUS) all-time high. And it's also fitting since that bit of hep C-focused M&A is what pushed Inhibitex's shares soaring to that high as the market anticipated more action in the space.

What makes Bristol's offer so startling is that Inhibitex's headline drug, INX-189, is only through phase 1 clinical trials. Granted, it posted some exciting efficacy data, but it is behind Pharmasset's PSI-7977 and still has a long, long way to go before FDA approval. Obviously, Pharmasset was a much larger company with a more extensive pipeline, so the total dollar value paid by Gilead was significantly higher, but what both of these deals show is how excited the major drug companies are about these next-gen hep C treatments.

The biggest loser here is likely Vertex Pharmaceuticals (NAS: VRTX) . It effectively beat out Merck in a David-and-Goliath struggle for the current best-in-class hep C treatment. Unfortunately, its instant blockbuster, Incivek, may be cut short if these new oral medications that don't require interferon and its nasty side effects prove as safe and effective. Given the large amount spent acquiring, Big Pharma thinks that is a likely outcome.

If you missed out on Inhibitex's instant double, don't worry. Motley Fool co-founder David Gardner has found a small health-care stock on the cusp of blockbuster growth and is offering to share its name with you for free in our special report "Discover the Next Rule-Breaking Multibagger." This must-read special free report is available for a limited time, so download it right now and don't miss your opportunity for truly market-beating returns.

At the time this article was published David Williamson holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Gilead Sciences and Vertex Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Gumby

Hep C market is much bigger than MS market.. Millons of people has Hep C and in need of treatment RIGHT NOW! Will Vertex produce enough for us? Johnson & Johnson will be paying royalty to Vertex for outside US and another company will pay royalty to Vertex for Japan . Just wait for next Vertex quarter announcement and I wont be surprised to see Vertex passing a billon dollar or two billon by the end of this quarter. Vertex is worth only $35 a share a steal.. or you can wait forever for Pharmassat and Inhibetx to come up with oral only treatments 3 years later . Vertex has the cure today ! I dont think Merck can buy Vertex at all., yet you all still sit on the fence??

January 10 2012 at 4:17 AM Report abuse rate up rate down Reply
Gumby

I compare Vertex to Biogen on MS... Biogen got there first and competitors failed to assail Biogen 's market share .. Biogen keep coming back with newer medicatoins for MS and Biogen still rules the MS market .

January 10 2012 at 4:10 AM Report abuse rate up rate down Reply
Gumby

Vertex is not the loser because it has an oral medication for Hep C on clinical trial like Pharmassat and Inhibitex. The Hep C market is so large that Vertex cannot dominate the market , anyway. Many patients will still be difficult to treat that interferon will still be required, too. It will depend on how much growth Vertex will be able to achieve in the next few years until Pharmassat finally comes to the market with its oral medicaton. It can be huge for Vertex because of the size of the Hep C market of millons of patients. Will patients wait years for oral medication only? They will want Vertex medication right away Vertex already hit close to $500 millon in revenues in its first quarter of approval of its Hep C medicatoin. Vertex can hit tens of billons by the time Pharmassat get approved. Then a year later or so, Vertex will come up with its own oral only medicatoin and start taking business away from pharmassat.

January 10 2012 at 4:09 AM Report abuse rate up rate down Reply