ContraVir Combination Drugs Moving Quickly To Historic Hepatitis B Cure

Summary

Multibillion-dollar worldwide market for HBV is driving race to a cure.

ContraVir’s success with combination drugs would revolutionize HBV therapy.

Standard risks apply, including possible trouble in the large Chinese market.

Management is well-connected, savvy, and dedicated to eradicating HBV.

Scourge of the world, in both developed and less-advantaged countries, exists in the form of hepatitis B virus (HBV), costing a projected $3.5 billion over the next five years. A cure is elusive, with most pharma firms hoping to control, and maybe eradicate HBV, but the virus invades human DNA and most meds cannot find or reach it. Replication is rampant, stealthily mutating into forms not affected by current drugs.

A novel and effective treatment for HBV is evolving at a rapid pace: relative newcomer ContraVir Pharmaceuticals, Inc. (NASDAQ:CTRV) has taken possession of CMX157, a potent analog of tenofovir, traditional therapy for HBV made famous by Gilead Sciences (NASDAQ:GILD) and branded as Viread. ContraVir added a chemical twist to tenofovir to lower blood exposure often toxic and to provide a better safety profile. The company has, in essence, created a direct acting antiviral therapy where other pharmaceutical assets can be married with CMX157 for an effective combination therapy. The goal is a cure.

ContraVir has an interesting history: Bristol-Myers Squibb (NYSE:BMY) originally bought Inhibitex, Inc. for $2.5 billion, desiring its new drug for hepatitis C. Not a good move, as it turned out. In the middle of clinical trials, one patient died and eight were hospitalized. Bristol-Myers eventually sold Inhibitex's other asset, a drug for shingles pain, to Synergy Pharmaceuticals (NASDAQ:SGYP).

Synergy spun out ContraVir in 2013, wiping its hands clean of virology to pursue irritable bowel syndrome and chronic constipation. ContraVir saw value in CMX157, not for hepatitis C, but for HBV. Soon after, ContraVir joined up with Chimerix Inc. (NASDAQ:CMRX), an oral antiviral firm, and began working to blend drugs to make something spectacular.

Through world-class scientific talent and pragmatic management, ContraVir figured CMX157, with a lipid 'tail', which is a vital component of all living cells, could target the liver and stay there to defeat HBV. The theory proved correct. CMX157 is a prodrug of tenofovir, meaning when in the body becomes pharmacologically active. Tenofovir's mechanism of action is well documented, a point that may ultimately benefit ContraVir.

Unlike Viread, CMX157 (because of its lipid component) inserts itself into the liver by natural pathways to achieve high levels of ContraVir's antiviral. Lab tests have shown CMX157 to almost double potency of tenofovir in blood plasma assays. Mouse models, too. This means that, if borne true in human studies, lower doses of CMX157 could result in the same efficacy of Viread but without bone, blood and kidney toxicity. CMX157, like Viread, is oral and its better safety profile could give Gilead serious competition.

In my conversations with Chief Medical Officer John Sullivan-Bolyai, Ph. D., he shared with me an interesting fact that I, having been laboratory-trained, could recognize as true: "If it (CMX157) works in the lab, it should work in people." This speaks well to tenofovir's widespread and scientifically understood efficacy. In my own research with chemical entities, this stands true.

ContraVir, forward-looking in its goal for combination therapy, made a key acquisition of privately held Ciclofilin Pharmaceuticals, a biotech devoted to developing a cyclosporine A derivative that, instead of suppressing the immune system, blocks HBV from invading liver cells with the added benefit of no toxicity that would otherwise be seen in cyclosporine-type drugs. CPI-431-32, Ciclofilin's flagship compound, is preclinical but could, as early as next year, be in humans alongside CMX157. Thus, fulfilling ContraVir's vision of double-barreled, liver-targeted treatment on the way to an HBV cure.

Sovaldi, Gilead's phenomena considered a cure for hepatitis C (albeit with a hefty price tag), is believed to have spurred research and development of HBV. Again, combination regimens of drugs that complement each other are lauded as a clear path to changing HBV therapy.

CMX157 is trialing in a Phase Ib, in healthy patients, to observe results at different doses. So far, detection of the drug has been found at the lowest dose of 5mg, once daily, suggesting smaller amounts of CMX157 may possibly be just as effective as Viread. Phase IIa is underway, in a direct face-off against Viread, a gutsy move and strong testament to ContraVir's confidence the drug works.

Studies will be fast and Phase II read-out should happen by year-end. Trials are done in Thailand, a country known for its high concentration of HBV infection, at seven university sites. This is a smart move on ContraVir's part: It's going where the patients are, so recruitment will be quick. Many of Thailand's HBV carriers have not had treatment, perfect for ContraVir's desire for 'treatment-naïve' enrollment goal of 60 patients.

Competition for HBV is healthy and heating up. The World Health Organization advocates Viread and Baraclude, a top seller from Bristol-Myers. Note: Interferon, a remedy long used in the US has been abandoned due to very nasty side effects. Gilead wants to extend its patent for tenofovir through the study of its sister drug, TAF, and results show equivalent efficacy to Viread with less toxicity. ContraVir plans to compare CMX157 to TAF, front-running clinical trial results that could amaze.

Not to be outdone, global giant Johnson & Johnson (NYSE:JNJ) signed up with Ichor Medical Systems to develop DNA-based vaccines, certainly not as attractive as taking a daily pill. Same with Arrowhead Research Corp. (NASDAQ:ARWR), whose HBV vaccine is in mid-stage trials with early, promising results. Other HBV hopefuls include tiny GeoVax Labs (OTCQB:GOVX) and recent entry Spring Bank Pharmaceuticals (NASDAQ:SBPH) whose IPO was slashed over 60% due to rising competition in this disease space.

One of ContraVir's value propositions I found particularly attractive is its de-risking approach from both a clinical and regulatory standpoint: Tenofovir is a well-known molecule, first discovered in 1985 and studied extensively; the FDA is intimately familiar with it, its risks and its benefits. CMX157, as an 'improved' version of an established compound allows the company to apply for the agency's 505(b)(2) new drug application that if granted lets ContraVir reference safety/effectiveness data of tenofovir studies not done by ContraVir itself, avoiding clinical trial duplication and saving time and money.

ContraVir raised $7 million in a secondary offering last April and stands with cash of more than $10 million as of this writing, expected to fund operations and clinical studies through the second half of next year. Its rate of operational burn is approximately $18 million, and although current phased trials will be efficiently done and aided by a possible 505(b)(2), the need to return to capital markets likely exists. A plus: ContraVir has a sizable cadre of notable institutional investors, including Vanguard Group and TIAA-CREF, with average 3-month trading volume a respectable 393,000 shares.

My first thoughts in understanding ContraVir were, given the value of an HBV cure, are any big players paying attention? Dr. Sullivan-Bolyai was candid with me, saying Johnson & Johnson and Bristol-Myers are "watching us very closely," and that ContraVir is in "Gilead's radar." CEO James Sapirstein launched Viread while at Gilead, and remains in close contact. Mr. Sapirstein's close contact with Gilead can't be ignored, and could benefit ContraVir.

An investment in ContraVir is risky. Clinical trials must produce good results, where toxicology may or may not present in larger study populations. A seemingly good relationship with FDA now may sour as key agency personnel come and go, in accordance with current political administrations. Upcoming binary events may turn south. If approved, its drug will need a calculated marketing plan. Pharma partners are likely, if all goes well, but sales reps tend to sell the highest margin product in their 'bag', which may not be CMX157.

On a more specific note, China, a huge market for HBV, recently revoked Gilead's patent for Viread, citing lack of novelty and pricing matters. China is now open for generic HBV medications, including Viread. CMX157 could face difficulties there selling a branded drug.

In my meetings with key management, the level of diligence to keep "all the balls in the air at the same time," and done correctly as stated by Dr. Sullivan-Bolyai, was apparent. This is a smart, focused and dedicated group of people who recognize combination therapy for HBV is the winning ticket towards a cure, and have found a way to do it.

Disclosure: I am/we are long CTRV.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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