Jul 23 2013, 12:32 by: Three Knights Capital | includes: ABBV, BMY, ENTA, GILD, JNJ
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The United States Preventive Services Task Force, or USPSTF, reversed its stance late on June 25 to conclude that all baby boomers - those people born between 1945 and 1965 - should be tested for hepatitis C. The USPSTF is an influential medical guidelines organization that advises Congress and, as its website reads, "makes recommendations about the effectiveness of specific preventive care services for patients without related signs or symptoms."
The recommendation of the USPSTF could lead to health insurance companies having to pay for screening under the revamped U.S. healthcare laws that start next year. It also could also lead to a lot more diagnoses of hepatitis C infections and a boon in sales for pharmaceutical companies. According to the Centers for Disease Control and Prevention, about 3.2 million Americans have the chronic version of the hepatitis C virus (HCV). Worldwide, it's estimated that more than 150 million people are infected with HCV, according to the World Health Organization.
HCV is a viral infection that can lead to swelling of the liver, cirrhosis, the need for transplant, and possibly even liver cancer. Today's standard of care is the injectable interferon, which is well documented to cause flu-like side effects. Because of the side effects and the method of delivery, new therapies that treat HCV more quickly are in great demand. Demand and potentially changing guidelines have planted several companies firmly on investors' radar.
A definite leader in the treatment of HCV is Gilead Sciences, Inc. (NASDAQ: GILD), with shares rising about 45 percent in 2013 as optimism for its oral HCV medication, sofosbuvir, are soaring. The drug is meant for use in combination with pegylated interferon and/or ribavirin, and represents what most consider the next generation of HPV therapies as an all-oral regime. Gilead's interferon-free ELECTRON trial of sofosbuvir demonstrated a strong response rate in patients with HCV genotypes 2 and 3 treated only with sofosbuvir and ribavirin.
Gilead, the world's biggest maker of HIV drugs, diversified into the HCV market by snagging the promising drug - and two other HCV drug candidates - in its $11.1-billion acquisition of Pharmasset, Inc. in November 2011. On June 10, the U.S. Food and Drug Administration granted Gilead priority review, following completion of Phase III clinical trials for the drug. Gilead is hoping for approval no later than early in December this year. S&P Capital IQ maintains a 5-STAR "Strong Buy" recommendation for Gilead.
Gilead may be leading the pack, but it is not alone in a race that will likely deliver billions of dollars in sales to the first to market. AbbVie (NYSE: ABBV) is nipping at Gilead's heels with its own all-oral, interferon-free treatment for HCV, with and without ribavirin. Much like sofosbuvir, AbbVie's HCV protease inhibitor ABT-450, in combination with other AbbVie drugs, produced strong response rates of greater than 90 percent in only a few months. ABT-450 was developed in a joint effort with Enanta Pharmaceuticals, Inc. (NASDAQ: ENTA).
AbbVie's drugs, ABT-450/r, ABT-267 and ABT-333, have received the vaunted "Breakthrough Therapy" designation from the FDA. A "Breakthrough Therapy" designation from the FDA, a relatively new category from the FDA (initiated in 2012), is meant to expedite the regulatory process for drug candidates that may meet great areas of unmet medical need. To date, the FDA has received over 60 applications for "Breakthrough Therapy" designation, but only 15 have been awarded, with AbbVie commanding three of them with its HCV treatments.
Shares of ABBV have also lofted higher, rising about 27 percent in 2013, on bets that they can catch Gilead in the quest for FDA approval to market a new HCV treatment. The Breakthrough designation gives AbbVie an outside shot, but Gilead appears to still be out front in a very close contest.
Even if one or both win the thumbs-up from the FDA, there are a host of other companies running the regulatory gamut with HCV drugs that can certainly still benefit in the future. It's also notable that both AbbVie's and Gilead's treatments would likely include ribavirin, a drug that many patients have difficulty tolerating. Bristol-Myers Squibb (NYSE: BMY), developing a ribavirin- and interferon-free treatment, is certainly in the hunt. BMS already has Baraclude approved for the treatment of chronic hepatitis B and several ongoing clinical trials testing its antiviral cocktails. In May, the company completed a Phase III trial of BMS-790052 and BMS-650032 in Japanese HCV patients. Japan has recently unveiled plans under Prime Minister Shinzo Abe that are meant to raise the number of clinical applications by consolidating management of research money. To that end, it will be interesting to see where BMS goes with this research moving forward.
Shares of BMY have risen about 23 percent so far in 2013.
Johnson & Johnson's (NYSE: JNJ) oral HCV drug, simeprevir, received priority review from the FDA in May and has also delivered very promising clinical data. It's noteworthy that research has been conducted combining simeprevir with Gilead's sofosbuvir with compelling results. That's another point in recognizing that there can be more than one blockbuster drug in the massive HCV industry. Several of the drugs in development could eventually receive FDA approval and potentially be used together to treat patients.
Shares of JNJ are up about 29 percent in 2013.
This also means considering medical device manufacturers in the HCV business. Late in June, Aethlon Medical, Inc. (AEMD.OB), a maker of medical devices targeting unmet medical needs in cancer, infectious disease and more, got the green light from the FDA to commence a clinical trial evaluating its Hemopurifier® in end-stage renal disease patients (ESRD) infected with HCV.
The Hemopurifier is a first-in-class "blood filter" that targets the rapid elimination of infectious disease and cancer glycophathogens, removing the pathogen from the bloodstream. It allows for extracorporeal therapeutic delivery on standard CRRT and dialysis equipment currently used in hospitals and clinics globally. Specific to HCV, the Hemopurifier potentially could be used as an adjuvant to any type of therapy, whether it is interferon-based or the aforementioned oral antiviral regimes. Further, for patients that develop a drug resistance to any or all HCV treatments, the Hemopurifier could work independently to reduce viral load.
Trials conducted in India showed the Hemopurifier to be well tolerated in naïve HIV and HCV-infected ESRD patients while reducing viral loads in excess of 50 percent in both disease conditions. Follow-on studies in non-ESRD HCV patients treated with the Hemopurifier and interferon demonstrated an undetectable viral load in as little as seven days in genotype-1 patients, the hardest-to-treat patient population.
Successful completion of the 10-patient clinical trial could pave the way to a pivotal trial necessary for marketing clearance of the Hemopurifier as a new HCV treatment.
Shares of AEMD.OB are ahead 71 percent so far in 2013.
There has certainly been no shortage of buzz surrounding potential "cures" for hepatitis C, qualified by no detectable HCV viral load. Investors have been jumping into the companies mentioned based upon the lucrative revenue stream potential that surrounds the disease, helping drive valuations for each upward. Regardless of who garners approval from the FDA first, each company is bringing something substantial to the table that could provide an invaluable benefit to patients, giving each one significant headroom for growth.
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