Celebrate the Hep C Wins, for Now

By Brian Orelli, The Motley Fool

Posted 8:36AM 04/21/12 Posted under: Investing

The data dump at this week's European Association for the Study of Liver Disease for hepatitis C drugs is nothing short of amazing. Early data suggests the drugs are working really well without the need for Merck's (NYS: MRK) PegIntron or Roche's Pegasys, which have to be injected and have unpleasant side effects.

• Gilead Sciences' (NAS: GILD) GS-7977 plus ribavirin looked good in multiple studies. Between 59% and 88% of patients had early cure rates. Good thing, since it paid $11 billion for Pharmasset, mainly for this drug.
• GS-7977 worked even better in combination with Bristol-Myers Squibb's (NYS: BMY) daclatasvir, with early cure rates between 91% and 100%, depending on the strain of virus.
• Daclatasvir plus another Bristol drug, asunaprevir, hit a 77% cure rate, but that isn't too shabby, since it was in difficult-to-treat patients and was measured 24 weeks after treatment. The early cure rates -- measured four weeks after treatment -- in the GS-7977 trials are preliminary and will probably come down a little.
• Don't forget about Abbott Labs (NYS: ABT) . The company doesn't get as much press -- not making acquisitions will do that -- but combining two of its drugs with ribavirin resulted in an 82% cure rate 36 weeks after treatment. Another combination looked even better, with cure rates between 93% and 95%, although that was only after 12 weeks of treatment.

No doubt, those are rule-breaking results. Add a few more drugs to the cocktail, and we might have long-term cure rates approaching 100%.

But investors should keep in mind that these are only phase 2 studies. The drugs still have to go through the final stage of clinical trials before they can go in front of the FDA. With hepatitis C drugs, efficacy data typically translates well from phase 2 to phase 3. The bigger risk is that side effects might crop up when the drugs are tested in a larger population. Data from one of the Abbott trials, for instance, was based on a whopping 11 patients.

The trials will also take some time to complete. Vertex Pharmaceuticals (NAS: VRTX) presented phase 2 data for Incivek as early as late 2006 and didn't get the hepatitis C drug approved until last May. It probably won't take quite that long for this generation of drugs, but the drugs are still years away from an approval.

Enjoy the data party; just realize revenue from the drugs is a way away and still not guaranteed.

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