GlaxoSmithKline has once again hit the acquisition trail and is buying the USA’s Genelabs Technologies for $57 million.

The drugs giant is to pay $1.30 per share in cash to acquire Genelabs in a move that GSK says will strengthen its efforts “to develop and deliver novel therapies against the hepatitis C virus”. The price being offered is more than five times the closing price of $0.23 of Genelabs shares last night.

Zhi Hong, senior vice president of the Infectious Diseases Centre for Excellence in Drug Discovery at GSK, said that “Genelabs has demonstrated a strong track record in HCV drug discovery and identified numerous novel classes of inhibitors that target unprecedented mechanisms in the virus’s life cycle”.

GSK claimed that there is a high unmet need for new drugs to treat HCV infection. The current gold standard therapy comprises pegylated-alpha interferon plus ribavirin, but the efficacy rate of this combination is relatively low (approximately 50%) and both drugs are associated with significant side effects that lead to treatment discontinuation.

The firm noted that several new antiviral drugs targeting multiple virus and host targets are currently in development. Furthermore, “rapidly-emerging drug resistance suggest that combination therapies with multiple classes of drugs will be required to achieve sustained virological response”.

The deal fits in well with the strategy espoused by GSK chief executive Andrew Witty last week when the firm announced its third quarter results. He said that a major acquisition is highly unlikely and small-to-medium-sized deals will be the way forward, especially during the credit crunch.

Fred Driscoll, chief executive of Genelabs, was clearly pleased, saying that the transaction “provides our shareholders with certain value at a substantial premium to our stock price”. He added that “we have generated highly differentiated compounds with the potential to address unmet medical needs of people with the HCV infection” and linking up with GSK will help accelerate these treatments. The deal is expected to close in December.