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Gilead Sciencies (NASDAQ:GILD) is believed to be leading the hepatitis C pill race, but AbbVie (NYSE:ABBV) is not far behind. According to Scott Brun, AbbVie's head of pharmaceutical development, AbbVie may even win the race.

In June, at the Goldman Sachs Annual Global Healthcare Conference, he said:

"I'll say that it is a very tight race and like I said we're executing extremely well and I think we've got a very good shot at being first, but it's close."

Gilead

In a Phase II trial, Gilead's all-oral hepatitis C treatments sofosbuvir and ledipasvir, an NS5A inhibitor, cured 95 percent of patients after eight weeks of the therapy.

Sofosbuvir, which Gilead acquired in 2012 in the famous $11 billion acquisition of Pharmasset, has proved itself in four completed Phase III studies.

In May, following the encouraging interim results from a Phase II trial of sofosbuvir and ledipasvir, Gilead Sciences announced plans for a Phase III trial of a fixed dose of the two drugs. Called ION-3, the study will test a once-daily fixed-dose combination therapy of the two drugs both with and without ribavirin for eight weeks, as well as without ribavirin for 12 weeks. Six hundred non-cirrhotic, new-to-treatment patients with genotype 1 of the virus will participate in the trial.

In June, Gilead received a priority review designation from the FDA, a step that can save about four months in the approval process.

Confident in approval, Gilead is getting ready for the launch of sofosbuvir in the first quarter of 2014 in the U.S. and the second quarter in Europe by preparing sales teams and arranging training opportunities for physicians.

AbbVie

According to Brun, Gilead's advantage is overstated.

AbbVie is running 6 Phase III trials in 30 countries around the world with over 2200 patients.

It is running a dedicated study in cirrhotic patients, who are the hardest to treat of all. Cirrhosis means the liver is scarred, and it functions poorly. Cirrhosis is considered the final stage of chronic liver disease. AbbVie's treatment represents a possible cure, even for these hard-to-treat patients.

AbbVie's HCV portfolio includes experimental medicines with three different mechanisms of action. The compounds in the studies are ABT-450/r (protease inhibitor and ritonavir), ABT-267 (NS5A inhibitor) and ABT-333 (non-nucleoside polymerase inhibitor).

AbbVie's treatment will require three pills in the morning and one at night, according to Brun. In a Phase II trial with the drugs, 90 percent of patients who completed the eight-week regimen had the virus cleared from their body.

Some analysts consider AbbVie's treatment cumbersome compared to Gilead's because it requires four pills a day. But according to Brun, this is a very manageable regimen when you consider the situation of the HIV infected patients who receive Ritonavir (AbbVie's drug for HIV) boosted regimens for a lifetime on a much more complicated schedule. It is a matter of patient education.

AbbVie also is working on next generation programs already: ABT-493 is a protease inhibitor and ABT-530 is an NS5A inhibitor, both with very favorable pharmacologic characteristics, and neither will need Ritonavir boosting.

AbbVie also testing a regimen in Japan for genotype 1b patients requiring two pills once a day for 12 weeks with no Ribavirin. It is using the co-formulation of the ABT-450 and ABT-267 with Ritonavir. This combination is also being prepared for western markets.

Combos

Competitiors to Gilead and AbbVie, including Medivir (OTC:MVRBF), Johnson & Johnson (NYSE:JNJ), Bristol-Myers Squibb (NYSE:BMY), Merck (NYSE:MRK) and Vertex Pharmaceuticals (NASDAQ:VRTX), among others, are all developing new oral hep C treatments.

The major challenge to development of an all-oral, interferon-free treatment is drug resistance.

Hep C circulates in the blood as a mixture of viruses with various sequences. It has been estimated that pre-existing drug resistance variants with one, two, three and even four mutations may be present in most hep C-infected patients and account for the rapid development of drug resistance on exposure to direct-acting antiviral drugs.

For a successful treatment it maybe necessary to use several direct-acting antiviral drugs in combination, and each of the components in a combination should have potent antiviral activity, possess non-overlapping resistance profile, and have limited or manageable drug interactions combined with minimal adverse effects.

There are a great number of combos tested in clinical trials.

Medivir has posted stellar interim data from its Phase 2a study of its hep C treatment simeprevir combined with Gilead's sofosbuvir. Medivir is a Swedish company working in partnership with Johnson & Johnson on this project. The combo therapy cleared the virus in 100 percent of genotype 1 patients.

Vertex's drug is also testing its experimental drug, VX-135 with Medivir's simeprevir.

While Gilead is unlikely to pursue a partnership with Medivir and J&J since the company is developing a combination of its own therapies, doctors may prescribe the pair off-label, provided the price is reasonable and payers are willing to pay for it.

Investors' summary

The hep C market is bigger than HIV.

Intravenous drug use, dirty tattoo parlors, tainted blood transfusions and carriers infecting offspring are some of the ways that millions of people around the world have contracted hepatitis C.

Hepatitis C attacks the liver and can lead to liver cancer. The virus affects about 150 million people worldwide and the market for new pills is estimated at $20 billion. Gilead's drug is projected to have annual sales of $6.03 billion by 2016, according to an average of 10 analysts estimates compiled by Bloomberg.

The introduction of pills will increase the overall market. Gilead estimates that 150,000 patients may seek treatment in the U.S. when these new drugs hit the market, which compares to the current 85,000 patients.

For both Gilead and AbbVie, a success in the hep C market is vitally important.

Gilead acquired Pharmasset in the 2011 buyout for about $11 billion, and at that time, some analysts believed that wager to be way too high. Now investors are anxious to see a return on it.

AbbVie currently is getting most of its earnings from its arthritis drug Humira, the world's best-selling drug, which is facing a patent expiry in several years, and a success with the hep C therapy would go a long way in strengthening its pipeline.

The prize each competitor in the race hopes to win is huge: a share of a $20 billion market. There is tremendous pent-up demand for oral therapies that can quickly wipe out hep C without using interferon.

At the Goldman Sachs conference, an analyst asked Abbvie if it is planning to challenge Gilead on the drug's price since Gilead has a much higher cost base as a result of having purchased Pharmasset for billions. The answer was that Abbvie does not price its products in this manner, and its pricing is based on estimating the value to the patients.

In the hep C race, "Gilead will be first, AbbVie will be on roughly the same timeline, Bristol-Myers will be somewhere after that," said Marshall Gordon, a New York-based analyst with Legg Mason Inc.'s ClearBridge Investments affiliate.

"To be fair, Gilead's drug looks better, but not that much better," Gordon said.

Source: The State Of The Hepatitis C Pill Race: Gilead Vs. AbbVie