In a bid to strengthen its efforts to develop new hepatitis therapies, GSK has agreed to buy Genelabs Technologies in a deal worth $57 million (£35 million).

Genelabs is probably best known for its collaboration with GSK to development of the world's first hepatitis E vaccine, currently in Phase II clinical trials. While hepatitis E is rare in the western world, it is endemic in developing countries where it is spread through contaminated food or water.

There are five different types of hepatitis (A-E), and while they differ in seriousness, they all damage the liver. Genelabs is also developing treatments against the hepatitis C virus (HCV), which affects an estimated 170 million people worldwide - the US HCV drug market alone estimated to be worth more than $2 billion.

Genelabs' HCV programmes are focussed on discovering small molecule nucleoside and non-nucleoside drugs that inhibit HCV replication. According to GSK, there is a large unmet need for new drugs to treat HCV  infections, especially as the current gold standard therapy option, PEGylated-alpha interferon plus ribavirin, is only effective in about 50 per cent of cases.

While GSK's portfolio includes vaccines against hepatitis A and B as well as two hepatitis B antivirals, its infectious diseases pipeline had looked relatively bare.

'This arrangement, combined with our other collaborations, will give GSK a broad HCV drug discovery platform addressing novel targets and innovative therapeutic approaches,' said Zhi Hong, senior vice president of the Infectious Diseases Centre for Excellence in Drug Discovery at GSK.

While GSK's $1.30 per share offer far exceeds the $0.23 Genelabs shares were trading at before the takeover deal was announced, the potential pay off for a successful HCV drug would be huge.

A cash-rich GSK may be preparing to buy up more small firms struggling in the current financial crisis, according to media reports. The company has further slowed its share buy-back programme - fuelling speculation of a pre-Christmas spending spree. 

Matt Wilkinson

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