August 15, 2013

Gilead Races against Competitors for an Oral Hepatitis C Cure

Provided by The Motley Fool

By Todd Campbell - August 13, 2013 | Tickers: ABBV, GILD, MRK, VRTX | 0 Comments

Todd is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The search for a hepatitis C cure is one of the most active areas within biotechnology research and development.

One of the company's ushering in the next generation of hepatitis C treatment is Gilead Pharmaceuticals (NASDAQ: GILD). The company acquired hepatitis C drug sofosbuvir in its $11.2 billion acquisition of Pharmasset back in January 2012.

Sonosbuvir has a very good chance of beating rival drugs to the market. Those competing drugs are being developed by Vertex Pharmaceuticals (NASDAQ: VRTX), Merck (NYSE: MRK) and AbbVie (NYSE: ABBV), the drug manufacturing giant that split off from Abbott Labs last winter.

Gilead's hopes for first-to-market approval.

In April, Gilead reported strong Phase 3 trial data. Those positive results for sonosbuvir as a combination therapy with ribavirin for genotype 2 and 3 hepatitis C patients prompted Gilead to file for FDA approval. The filing also seeks approval for sonosbuvir combined with ribavirin and interferon for genotype 1 -- the most common variant of the disease. The FDA granted Gilead's application priority review in June.

However, the holy grail of Hepatitis C treatment is an interferon free oral treatment alternative.

Developing such a solution will likely grab significant share in the $20 billion hepatitis C treatment market because interferon comes with significant side effects and current non-oral treatments require injections, which many patients dread.

As a result of the opportunity, Gilead is studying 12 and 24 week dosing of oral sonosbuvir without interferon through its Ion 1 and Ion 2  trials.

If those trials work as hoped, doctors will likely make it a first line treatment, shifting use of current treatments from Vertex and Merck to second tier status. Vertex's Incivek - the fastest drug to reach one billion in sales after launching in May 2011 -- and Merck's Victrelis combined to generate $330 million in sales last quarter.

But, that underestimates the true potential for an oral hepatitis C treatment as many doctors are delaying treatment in hope of these new options. This suggests the first to market will see significant ramp in sales tied to pent-up demand.

Gilead's competitors aren't giving up.

That's not to say Vertex and Merck are giving up on the market. Both are committing significant resources developing their own interferon free choices.

Vertex hopes to follow up its highly successful Incivek with another all-oral option. However, the company's VX-135 faced headwinds in late July when the FDA put a partial hold on a mid stage trial of the drug due to toxicity concerns tied to the highest 400 mg dose. The trial is continuing for the lower 100 mg dose.

At Merck, the company announced its MK-5172 saw a 92% cure rate six months after completing a 12 week treatment course. MK-5172 was dosed alongside ribavirin in the trial.

But, the competitor closest to threatening Gilead in the race to launch is AbbVie. During an investment conference in July, the company suggested it could have the first oral drug approval. It is in the final stages of its phase 3 trials. If approved, AbbVie's drug would help the company diversify its sales away from mega-blockbuster Humira, which accounted for $2.6 billion in Abbvie sales last quarter, roughly 55% of the company's total revenue.

Despite pressure from AbbVie, Gilead seems to remain the front runner.

Its sonosbuvir treatment would require just one daily pill versus four for AbbVie's drug. And, sonosbuvir showed a 95% cure rate in Phase 2 trials, similar to AbbVie's cure rate following 12 weeks of treatment. This suggests even if AbbVie does get to market first, doctors and patients will likely favor Gilead's drug.

That could mean a big pay day for the company given there are roughly 180 million people infected with Hepatitis C worldwide. While drug development is notoriously difficult and setbacks do occur, it appears Gilead and AbbVie should be watched closely as either could see substantial revenue growth if granted approval, making them Fool-ishly attractive.


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