High Stakes Intrigue In Hep C: Bristol-Myers Vs. Gilead

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Peter Geschek

Jan. 22, 2014 3:47 PM ET |  About: BMY, GILD

Gilead's (GILD) reluctance to marry its Hep C drug Sovaldi with Bristol-Myers Squibb's (BMY) daclatasvir forced Bristol to take evasive action.

Bristol applied to the European Union for approval of daclatasvir, an investigational NS5A complex inhibitor, for the treatment of adults with chronic hepatitis C with compensated liver disease, including genotypes 1, 2, 3, and 4. The application seeks the approval of daclatasvir for use in combination with other agents, including Sovaldi.

The EU accepted the application for an accelerated regulatory review. Hepatitis C represents a high unmet need in Europe where an estimated 9 million people are living with hepatitis C.

The EU submission follows a filing in Japan seeking approval for the treatment of patients infected with HCV genotype 1b.

Divorce before marriage

An article in the January New England Journal of Medicine presents great results from the combination trial of Sovaldi and daclatasvir.

Initially 44 previously untreated patients with genotype 1, 2 and 3 were tested with daclatasvir at a dose of 60 mg once daily tablet plus Sovaldi at a dose of 400 mg once daily tablet, with or without ribavirin, for 24 weeks.

Later on the study was expanded to include 123 additional patients with Genotype 1 infection. 82 patients were previously untreated and 41 patients had been previously treated with Incivek (made by Vertex (VRTX)) or Victrelis (made by Merck (MRK)) plus peginterferon alfa and ribavirin. The primary end point was a sustained virologic response (an HCV RNA level of lower than 25 IU per milliliter) at week 12 after the end of therapy.

The results represent, as is known from previous announcements, a breakthrough.

Overall, 211 patients were treated. Among patients with Genotype 1 infection, 98 percent of 126 previously untreated patients and 41 patients previously treated, had a sustained virologic response at week 12.

With Genotype 2 infection, 92 percent of the 26 patients and with Genotype 3, 89 percent of 18 patients had a sustained virologic response at week 12.

98 and 100 percent of sustained virologic response were observed among patients with HCV subtypes 1a and 1b and 93 and 98 percent with CC and non-CC genotypes.

The most common adverse events were fatigue, headache, and nausea.

In spite of the success, the companies haven't been able to agree on further testing of the combination.

Bristol's trials

Not getting any cooperation from Gilead, in January Bristol has started 3 Phase 3 trials on its own, testing daclatasvir and Sovaldi with a European submission in mind.

A very sick segment of the patient population will be enrolled.

The trial called Ally 1 is testing the drugs in patients with cirrhosis (end-stage liver disease) due to chronic HCV, and in patients who already had received a liver transplant.

All subjects will be treated with daclatasvir and Sovaldi for 12 weeks. The treatment may be extended for cirrhotic subjects. The plan is to enroll a total of 110 patients.

In arm 1a one 60 mg tablet of daclatasvir and one 400 mg Sovaldi tablet will be given each day to cirrhotic patients for 12 weeks.

Arm 1b is handling cirrhotic subjects who undergo transplant while in the study and require an extension. For these patients a ribavirin tablet will be added to the regimen, a daily dose of 1000-1200 mg in two divided doses for 12 weeks.

Arm 1c includes patients from arm 1b who relapsed and need further treatment for another 12 weeks.

Arm 2 of the trial is for post-transplant patients, a 12 week course. Primary outcome measure will be the proportion of Genotype 1 infected cirrhotic subjects who obtain SVR12, a sustained virologic response and the proportion of Genotype-1 post-transplant subjects with SVR12.

The trial called Ally 2 is to treat Hep C patients who also have an HIV infection.

All subjects are getting daclatasvir 30, 60 or 90 mg tablets and a Sovaldi 400 mg tablet daily. The first group includes new-to-treatment patients in a 12 weeks course, the second group is new-to-treatment patients treated for only 8 weeks and the third group comprises previously treated patients in a 12 weeks course. A total of 200 patients are planned to be recruited.

Ally 3 is focusing on Genotype 3 which has proven to be a tough subtype to treat in past trials.

One group is new-to-treatment, the other is previously treated patients with a total enrollment aimed at 150 people.

Bristol's strategy

Independent investigators like Graham Cooke at Imperial College London expressed the view that the Sovaldi/ledipasvir combination will probably be a winner in the large Genotype 1 population, but Genotype 3 patients could be better served with the Sovaldi/daclatasvir combination.

In other words, ledipasvir may be effective in patients with Genotype 1, the most common form worldwide, but it may not work so well for those with Genotype 3, which accounts for about 25 percent of cases in Europe and 45 percent in the U.K., and represents a sizable minority in other key markets in the world.

Bristol-Myers' strategy is seeking European approval for daclatasvir in order to pair it with Gilead's Sovaldi before Gilead gains clearance for its own combination. If the strategy works in Europe and the approved label is broad enough to include daclatasvir with Sovaldi, Bristol will try the same strategy in the U.S.

The European Union has large numbers of patients with HCV infection in urgent need of new treatment options. Due to the progressive nature of Hep C, decades may pass before patients start having symptoms. Many of these aging patients develop liver disease, making them more difficult to treat with the current standard of care of interferon plus ribavirin with or without a protease inhibitor.

Viral hepatitis has also been cited as a cause for the increase in HCC (hepatocellular carcinoma) in Europe.

Daclatasvir has been well studied now in more than 5,500 patients in a variety of all-oral regimens. The drug has shown potency against all genotypes, a low drug-on-drug interaction profile and has been well-tolerated in all investigational regimens and patient types without significant side effects.

Gilead's strategy

Gilead is developing an all Gilead-made combination in-house: it combines the approved Sovaldi with the experimental ledipasvir.

Gilead's justification for going alone is speed and expediency. Norbert Bischofberger, Gilead's head of research and development, stated in an e-mail sent to Bloomberg:

"We believe that we have been able to advance the development of this fixed-dose combination much more quickly than would have been possible with any inter-company collaboration. Gilead remains focused on delivering the simplest and safest all-oral treatment regimen to patients as quickly as possible."

He also said this in a press release:

"The results of the ION studies demonstrate that a simple, safe and short course of therapy with a single tablet regimen of sofosbuvir/ledipasvir can provide high cure rates among patients with genotype 1 HCV infection, while eliminating the need for both interferon and ribavirin. With the availability of these results, Gilead is finalizing its regulatory filing for sofosbuvir/ledipasvir, with the goal of submitting a New Drug Application in the first quarter of 2014."

After betting billions to come up with a new standard of care for Hep C ahead of all others, Gilead isn't likely to change its attitude toward the army of critics who claim that the company places business goals ahead of patients' interest.

When it was approved in December by the FDA, Gilead's Sovaldi became the first all-oral treatment for certain hepatitis C patients. Johnson & Johnson (JNJ) and Medivir AB also won FDA approval for their pill, Olysio, but this drug needs to be combined with other medicines, including some current treatments with undesirable side effects.

Gilead is testing other drugs, besides ledipasvir, to produce a full oral combination treatment, but those may not be available until the end of 2014 or the beginning of 2015.

Markets

According to the Centers for Disease Control and Prevention, about 3.2 million Americans are infected with the hepatitis C virus.

Hepatitis C is a viral disease that causes inflammation of the liver that can lead to diminished liver function or liver failure. Most people infected with the hepatitis C virus have no symptoms of the disease until liver damage becomes apparent, which may take several years. Most of these people then go on to develop chronic hepatitis C. Some will also develop scarring and poor liver function (cirrhosis) over many years, which can lead to complications such as bleeding, jaundice (yellowish eyes or skin), fluid accumulation in the abdomen, infections or liver cancer.

The race to develop hepatitis C pills is a part of a competition among drugmakers to find more convenient treatments that produce fewer side effects than current therapies, including injections. Since the viral infection can lead to liver cirrhosis, U.S. health officials recommended that every American born from 1945 to 1965 get tested for the disease.

The new combinations are projected to broaden the Hep C market which analysts estimate may reach $100 billion over a decade.

Investors' summary

Gilead: Gilead's Sovaldi, by itself, is priced at $84,000 per treatment, and is projected to sell $8.22 billion in 2016, according to an average of 11 analysts' estimates compiled by Bloomberg.

The Wholesaler Acquisition Cost of a 28-tablet bottle of Sovaldi in the U.S. is $28,000. If the Sovaldi/daclatasvir combination obtains regulatory approval, it almost certainly will become a blockbuster.

Bristol-Myers is focusing lately on antiviral treatments, cancer drugs and specialty medicines. It ended its work on diabetes treatments last month, selling a stake in a joint venture with U.K.- based AstraZeneca (AZN) for $4.3 billion.

Bristol's stock price ranged from $34.32 to $56.83 in the past 52 weeks, with investors appreciating the new, more promising direction of the company. Currently the price is positioned above both the 50 and 200 days simple moving averages.

Bristol-Myers Squibb Company is expected to report earnings on January 24th. Bloomberg's analyst poll forecasts $0.43 EPS for the fourth quarter, $1.74 for the whole year of 2013 based on a projected $16.3 billion annual earnings and an EPS of $1.77 based on $15.7 billion of projected earnings for 2014.

Regarding the Hep C race, it is too important for any of the participants to give up on it. Gilead may end up a winner in the race but Bristol-Myers Squibb certainly will do its utmost not to be left behind.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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