The Race Is On For Hepatitis C Treatment

On Friday August 13, 2010, 6:57 pm EDT

How's this for a biopharmaceutical market opportunity? Prospective patients in need: 170 million. That's 3% of the world's population.

The disease is hepatitis C, a contagious, slow-developing, blood-borne disease that can make 80% of those infected vulnerable to severe liver problems, including cirrhosis and cancer.

Hepatitis C wasn't even identified until 1987. A blood test for it became available in 1992.

Now a score of companies are racing to bring new treatments on stream. Out front are Merck (NYSE:MRK - News) with boceprevir, and a partnership of Vertex Pharmaceuticals (NMS:VRTX) and Johnson & Johnson (NYSE:JNJ - News) with telaprevir.

The market will be pretty much evenly split between the two, says Damien Conover, a strategist and senior pharmaceutical analyst at rating firm Morningstar. Telaprevir may have a slight edge, he says.

Both drugs are protease inhibitors, which prevent a virus from replicating itself. While they treat the same disease, they are different in both results and side effects.

Used on patients who have had no previous treatment, boceprevir and telaprevir beat down the hepatitis C virus to undetectable levels in 66% and 75% of patients respectively, Conover says.

Both drugs are likely to go to the Food and Drug Administration for a verdict by the end of the year. That means both could reach the market next year.

"Right now it's hard to tell who's in the lead," Conover said.

Meanwhile, Merck and Vertex-J&J appear to be competing for headlines.

A week ago, the British-based Lancet medical journal carried a Merck-funded study showing that boceprevir brought the virus down to undetectable levels in 66% of patients over 48 weeks of treatment in combination with drugs in use now.

The next day, Aug. 10, Vertex reported study results showing that some patients did so well after a 24-week course of telaprevir (plus the current drugs in use) that they got no added benefit from a 48-week course of treatment. The message: Telaprevir does the job in half the time.

Merck acquired boceprevir with its $41 billion purchase of Schering-Plough in 2009. Vertex developed telaprevir with money from J&J in return for marketing rights.

Whether one or both of the drugs get FDA approval, the hepatitis market is about to undergo a "major paradigm shift," said Steven Silver, an analyst at Standard & Poor's.

"We've gone many years without a new drug on the landscape," he said.

It's hard to know which drug will do better in real life and in the market because they have not been tested head-to-head.

That's a long-standing problem in the drug-development industry. Prospective new products are tested either against a placebo (sugar pills) or, as in the cases of boceprevir and telaprevir, against the current standard of care.

For hepatitis C, that standard is a combination of interferon and ribavirin. It's a hit-or-miss treatment.

In simple terms, ribavirin is an antiviral medication that stops the virus that causes hepatitis C from spreading. Interferon prevents viral replication in surrounding cells.

According to the National Center for Biotechnology Information, it's not known if treatment with ribavirin and interferon actually cures hepatitis C infection, prevents liver damage caused by hepatitis C or keeps hepatitis C from spreading to other people.

The standard hepatitis C treatment results in a reduction of the virus to undetectable levels in fewer than half of cases, according to WebMD (NMS:WBMD).

Boceprevir and telaprevir are protease inhibitors. In brief, they attack the hepatitis C virus itself, WebMD says.

Without head-to-head tests, with the same dosing regimen and with the same kind of patient population, it's hard for investors to figure out whether boceprevir or telaprevir will be the greater success, assuming both get FDA approval, Conover says.

But head-to-head studies "are often not in the best interest of the company," he said.

They can show one drug so superior as to make the other unmarketable. "Head-to-head studies can backfire," Conover said.

According to Silver, the investment community "is trying to ballpark the information released to date."

He sees Vertex prevailing with telaprevir: "It's poised to be the market leader."

Data collected on real world use of these drugs are still some years off.

The market will be watching boceprevir and telaprevir for the next three or four years, Silver says.

An important factor will be the success rate of the drugs on people who have previously failed to respond to the standard of care.

That's not how clinical trials are run. They are usually conducted with patients who have not had therapy, the so-called treatment-naive. Using treatment-naive patients creates a baseline but does not approximate real-life conditions.

Most people with a disease have tried one or more drugs, ratcheting up from least to most powerful and expensive.

Another real-life issue will be the side effects. Newly diagnosed patients may find the side effects of either drug, plus interferon and ribavirin, intolerable.

The most common telaprevir side effect is a rash, Stevens says.

Boceprevir's predominant side effect is anemia. That raises the prospect that another drug will need to be added to the regimen, perhaps Epogen, the anemia-fighting biologic from Amgen (NMS:AMGN).

It's available as a generic in Europe, but remains branded in the U.S.

Another reason to think telaprevir has the inside track is the likelihood that it will require a shorter period of treatment, Silver says.

"At the end of the day, this race will be data-driven," he said.

While there's been no head-to-head trial, the existing data should become available for close comparison at a meeting of the American Association for the Study of Liver Diseases in Boston starting Oct. 28.

By most counts, the global market for hepatitis C products is now $4 billion a year. According to a report from the commercial analysis firm Research & Markets, that should rise to $8.5 billion by 2016.

The reasons for the growth: the increasing number of cases and the new drugs in the pipeline that will make treatment more accessible and tolerable.

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