Merck and Roche Strike Hepatitis C Pact

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Includes: MRK, RHHBY
by: The Burrill Report

By Michael Fitzhugh

Merck (NYSE:MRK) and Roche (OTCQX:RHHBY) will work together to promote Merck's newly-approved hepatitis C therapy, Victrelis, and to explore the development of new hepatitis C treatments from combinations of already-approved and experimental drugs.

Under the terms of the non-exclusive agreements, Roche will promote Victrelis to U.S. physicians as part of a triple combination therapy regimen. The companies are also negotiating to extend the co-promotion deal globally, they say. Financial terms of the agreement were not released.

Chronic hepatitis C, a viral disease that causes liver damage and sometimes liver failure, affects about 3.2 million people in the United States, according to the U.S. Centers for Disease Control and Prevention. Treatment during the last decade has primarily relied on a 48-week course of two generic drugs in combination, peginterferon and ribavirin. Now, with Victrelis and Incivek, a Vertex Pharmaceuticals (NASDAQ:VRTX) drug which is widely expected to become FDA-approved in May for treating hepatitis C, the duration of treatment is expected to be trimmed to as little as 24 weeks for many people battling the chronic infection.

Victrelis, when used in combination with peginterferon and ribavirin, has also proven substantially more effective than the current standard of care, peginterferon and ribavirin used alone. Clinical studies of Victrelis demonstrated a cure rate of 66 percent, versus the 35 to 40 percent cure rate offered by Merck's peginterferon and ribavirin combination, Pegintron, or Roche's version of the combo, Pegasys. Vertex's Incivek has demonstrated an even bigger improvement in clinical trials, with a 79 percent cure rate in newly treated patients.

"Triple combination therapy for hepatitis C marks a major change in the way this disease is treated," says Pascal Soriot, COO of Roche's pharmaceuticals division.

Providing a clear and strong message to patients infected with hepatitis C and considering treatment with Victrelis could prove especially important to clearing up what Enzon Pharmaceuticals (NASDAQ:ENZN), a company providing technology used in Merck's injectable hepatitis C treatment Pegintron, called "the unsettled hepatitis C market."

"There has been some indication that a significant number of patients suffering from hepatitis C may be deferring treatment until the new therapies become available potentially as early as mid-2011," the company noted in its latest annual report, issued March 16. Such deferment is made possible by the slow pace at which the disease progresses in patients whose infections have yet to critically tax their overall health.

Analysts expect sales of both Victrelis and Incivek to grow rapidly, projecting both drugs will generate more than $1 billion in annual sales.