Why a Backup Plan Is No Plan at All

Provided by The Motley Fool

By Brian Orelli
September 30, 2013

Achillion Pharmaceuticals  (NASDAQ: ACHN )  fell 58% today after giving a pipeline update on its hepatitis-C treatments.

I'm not sure which is worse: that sovaprevir is still on clinical hold or that if it ever gets off of clinical hold, the phase 2 data was nothing special.

They're both pretty bad.

You'll recall the Food and Drug Administration put sovaprevir on clinical hold back in July after the biotech saw elevated liver enzymes in a trial combining sovaprevir with atazanavir. Achillion provided the necessary data that the FDA wanted, but the agency wasn't willing to lift the hold.

Hepatitis-C drugs have hit a rough patch lately. Two of Idenix Pharmaceuticals' (NASDAQ: IDIX ) compounds were put on clinical hold, and the biotech eventually had to scrap them because of their similarity with Bristol-Myers Squibb's BMS-986094, which had side-effect issues.

Vertex Pharmaceuticals' (NASDAQ: VRTX ) VX-135 also had issues with elevated liver enzymes. The drug was only put on a partial hold because the problem was seen solely at the higher dose.

Elevated liver enzymes are never a good sign because they suggest the drug might be damaging the liver. And that goes double for hepatitis-C drugs that are treating a viral infection that primarily attacks the liver.

Good isn't good enough
Achillion managed to get some data from a phase 2 trial combining sovaprevir, one of its other drug candidates called ACH-3102, and a generic drug ribavirin before the clinical hold went into effect. The drug combo removed traces of the virus in 79% of patients when measured four weeks into the 12-week trial.

A cure -- called a sustained viral response -- is typically determined four to 12 weeks after the treatment ends. Some patients with a rapid viral response that Achillion is measuring with this interim data will rebound, so the 79% is the best the cure rate could be. It'll likely be lower.

A 79% cure rate isn't bad compared to the current standard of care. Vertex's Incivek produces comparable cure rates, but must be taken with peg interferon, which has to be injected. Unfortunately, meeting the current standard of care with an all-oral combination isn't good enough anymore because a new standard is on its way. Gilead Sciences (NASDAQ: GILD ) and AbbVie (NYSE: ABBV ) have all-oral combinations that are approaching 100% cure rates.

Backup plan
Achillion's new plan is to combine ACH-3102 with another drug candidate, ACH-2684. Data from that combination will be available next year. But that's only going to be a proof-of-concept trial. The biotech would still have to run a couple phase 3 trials to get the combination on the market.

Being years behind Gilead and AbbVie will end up being very costly. Remember, these drugs cure patients. Any patient who is treated successfully by Gilead's or AbbVie's combinations won't need drugs from Achillion.

The hepatitis-C market is only going to get smaller. A backup plan might end up being no plan at all.

A pair of game-changing biotechs
The best way to play the biotech space is to find companies that shun the status quo and instead discover revolutionary, groundbreaking technologies. In the Motley Fool's brand-new FREE report "2 Game-Changing Biotechs Revolutionizing the Way We Treat Cancer," find out about a new technology that big pharma is endorsing through partnerships, and the two companies that are set to profit from this emerging drug class. Click here to get your copy today.

Source