The market is booming with new drug treatments aimed at 'curing' Hepatitis C or at least preventing further damage to the liver and other organs. Hepatitis C, a virus that enters the body via the bloodstream and wreaks havoc without causing many external symptoms, is a progressive disease that could be fatal if left untreated. It is only after severe damage to liver (detected by specifically testing for damage) that most patients even know they have it. And while a cure does not exist, several new drugs on the market promise to 'kill' the virus or stop it from doing more damage.
Vertex Pharmaceutical's (VRTX) latest drug, Incivek, developed to 'cure' Hepatitis C ('cure' simply means to stop the virus from continuing to attack the body. The virus may go into a dormant state, but will still remain in the cells), is still undergoing Phase II clinical trials to ensure its effectiveness and safety. Patients participating in the study have reported bouts of fatigue, skin rash, nausea, and headaches. These side effects are not dangerous, but the company wants to make sure to isolate these incidents and determine the causes (and hopefully tweak the drug to prevent future incidents) before submitting an application for approval by the FDA.
Companies applying for FDA approval must be very careful when submitting data from studies as review committees can reject an application for both major and minor reasons. While a headache or skin rash may not seem like a dangerous side effect, the FDA will review under what conditions these side effects occur and what the company does to prevent future side effects from occurring.
In addition to Incivek, Vertex also has in its portfolio Kalydeco (invacaftor), used to help in the treatment of cystic fibrosis. This prescription medication is the only one of its kind to receive approval from the FDA. The company also developed Lexiva (fosamprenavir), marketed by ViiV Healthcare. This is a prescription drug used to help treat those with HIV. Vertex also has an extensive list of drugs in its pipeline for conditions and diseases such as influenza, epilepsy, cystic fibrosis, hepatitis C and immune-mediated inflammatory disease. Each of these drugs is currently enrolled in various clinical trial phases.
Since Phase II trials for Incivek seem promising, Phase III trials will soon start, which are the last phase of trials before the company seeks FDA approval.
Vertex has a proven track record for developing and marketing successful drugs. With several in its pipeline used to treat a variety of diseases and conditions, investors should closely follow this company over the next few months. If Incivek receives approval from the FDA, this drug could become a best seller in very little time. Investors have the option of hedging their bets and investing with the company now while the stock price is lower or wait until after Phase III trials end to determine if Incivek lives up to the hype. Investors may pay more to invest at that point, however, as news of positive Phase III trial outcomes will cause the stock price to increase very quickly. If the drug receives FDA approval, the stock price will continue to rise and investors may wish they had invested during Phase II trials. For current investors, holding on to this stock is recommended unless something drastic occurs during Phase III testing.
Another positive quality about Vertex from an investment standpoint is the company's level of experience. The company continues to invest time and resources into diseases and conditions it already knows something about. For example, two of the company's experimental drugs undergoing clinical trials were created to help treat cystic fibrosis. Three others help treat Hepatitis C. This shows the company invests its money not only into the research and development of these drugs, but also its time to fully understand the causes, symptoms and possible treatment options of specific diseases and conditions.
In addition to Vertex, companies like Abbott Laboratories (ABT), Bristol-Myers Squibb (BMY), and Gilead Sciences (GILD) have developed drug treatments for Hepatitis C. Each company developed drug treatments that don't require the use of interferon (protein used in various virus medications that interfere with virus cell growth). Unfortunately, as a virus mutates, it may become resistant to interferon, which remedy the medications that have them useless.
Abbott's drug treatment for Hepatitis C has performed very well in recent testing. In small studies, those previously treated for the virus had a 47% 'cure' rate when treated with Abbott's new drug. Those who had never received treatment showed a 93%-95% 'cure' rate. Abbott may start a larger clinical trial before applying for FDA approval. If it can provide these types of results in a larger trial, the FDA should approve the drug quickly.
Bristol-Myers Squibb and Gilead Sciences worked together to develop a Hepatitis C drug. In a leaked data sheet, posted briefly on the European Association for the Study of the Liver (EASL) conference website, the new drug, which combines NS5a inhibitor daclatasvir (BMS-52) and GS-7977, had impressive response rates in patients taking the drug over a 12-week period. The data showed that 90% of patients showed some sign of recovery.
Unfortunately, for investors, having too many options can lead to poor investment decisions. Even though the preliminary data from each new Hepatitis C drug seems promising, investing based on this data alone is not recommended. Even if the drugs perform well in Phase III trials, there is still a risk the drug will underperform in the marketplace. When provided a variety of effective drugs, investors can never tell which drug will appeal most to patients and medical professionals. This is why it is so important to review a company's entire portfolio before keeping or dumping a stock.
But since each of these companies stock is currently down, investors may want to sit back and wait a few more days before making any hasty decisions.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
