The Race For Oral HCV?

by: Emerging Equities

Gilead Sciences (GILD) announced on May 21, 2013 that the European regulator EMA (European Medicines Agency) started the process of assessing the company's once daily oral treatment for hepatitis C virus (HCV) and will furnish an accelerated review.

Earlier, on May 13, Johnson & Johnson's (JNJ) experimental drug, still in mid-stage trial, got priority review status from the FDA. A week earlier, the FDA accorded breakthrough status to the Hepatitis C virus regimen of AbbVie (ABBV).

The race, therefore, is on.

The disease

Hepatitis C is caused by infection of the hepatitis C virus that attacks the liver causing inflammation and long term complications. 40% of the patients infected with HCV recover fully and the remaining 60% become chronic carriers, regardless of whether they have symptoms or not. 20% of these develop cirrhosis. 20% of patients suffering from cirrhosis develop liver cancer. Europe alone has roughly four million carriers and 3% of the world's population has HCV. That is roughly 80% of the U.S. population, in number terms.

An HCV positive individual has anti-HCV antibodies and/or HCV RNA or HCV core antigen in blood. All HCV positive individuals are potentially infected and contact with their blood -sharing infected injection needles, receiving blood or accidental exposure - can cause infection.

Currently, standard treatment for HCV is a 24-28 week therapy with ribavirin (a nucleoside inhibitor) and peg-IFN (pegylated interferon) injections, which cause significant side effects such as flu-like symptoms that persist through the course of the treatment. Protease inhibitors, Victrelis from Merck & Co (MRK) and Incivek, developed by Vertex Pharmaceuticals (VRTX) in partnership with Johnson & Johnson, helped improve cure rates but still involved side effects as these treatments also involved interferon injections.

The market for HCV is expected to grow to $8.5 billion by the end of 2016. A Bloomberg report estimates the market for new HCV drugs to reach $20 billion by 2020.

Gilead's sofosbuvir

Sofosbuvir was discovered by Pharmasset, a New Jersey company that Gilead acquired in November 2011 for $11 billion. Gilead submitted sofosbuvir for approval in early April. The FDA normally takes two months before accepting a new drug application (NDA) for a 10-month review. A priority review takes 6 months. Gilead's MAA (Marketing Authorization Application) before EMA was submitted on April 17, 2013 and validation by EMA is indeed good news for Gilead's investors.

Data submitted by Gilead in the application relates to the use of sofosbuvir and ribavirin (RBV) as an oral therapy for patients with genotype 2 and 3 HCV. For patients with genotype 1, 4, 5 and 6, the data supports treatment with sofosbuvir, RBV and peg-IFN injection.

Johnson & Johnson's simeprevir

Johnson & Johnson filed an NDA for its oral HCV treatment on March 13, 2013 and as such is about a month ahead of Gilead. Janssen Research & Development, LLC (Janssen), the company's subsidiary, announced on May 13, 2013 that simeprevir had been accorded priority review status.

Simeprevir is a NS3/4A protease inhibitor, which Janssen is developing in partnership with Medvir AB for treatment of genotype 1 chronic hepatitis C in adult patients with liver disease, including all stages of liver cirrhosis/liver fibrosis. It is to be a once-daily 150 mg capsule used in combination with pegylated interferon and ribavirin.

Janssen has recently submitted marketing authorization applications with European and Japanese regulators as well.

AbbVie's HCV regimen

AbbVie, the biopharmaceutical company that was spun from Abbot (ABT) is the third significant player in oral treatments for HCV. AbbVie is developing an all-oral treatment regimen as an alternative to interferon alpha injections. AbbVie's three-drug HCV treat comprises of ritonavir-boosted protease inhibitor ABT-450, non-nucleoside polymerase inhibitor ABT-333 and NS5A inhibitor ABT-267.

AbbVie's HCV treatment regimen is currently in Phase III stage after Phase IIb study provided encouraging results with 12 weeks of therapy in patients not treated earlier and those who did not respond well to treatment with ribavirin and interferon injections. On May 6, 2013, the company announced that its all-oral HCV treatment regimen has been awarded breakthrough designation by the FDA.

Who's ahead in the race?

The real race is between Gilead and AbbVie. It is not that Johnson & Johnson is lagging behind. It may even beat the other two to FDA approval. However, the real issue is not about which drug gets approved first but about an all-oral HCV treatment.

New treatments for HCV can make an impact provided they help in avoiding the 24/48-week long flu-like symptoms caused by interferon injections. Moreover, HCV is a slow progressing disease. The declining sales of Vertex, which offers Incivek (telaprevir), which is used in combination with pegylated interferon, is indication enough that there is no immediate need for a new drug that has nothing extra to offer.

Johnson's simeprevir is to be used in combination with pegylated interferon injections and ribavirin. At the same time, Gilead's sofosbuvir is an oral drug only for genotype 2 and 3. For genotype 1 HCV, which is the most common type in the U.S, it is to be used with interferon and ribavarin.

I would rather bet on AbbVie and its interferon-free cocktail of three drugs whose latest Phase 2b trials have shown amazingly high sustained viral response (SVR) rates, an efficacy measure of HCV treatment. 96% of treatment naïve patients and 93% of those who did not respond to prior treatment achieved SVR24.

It may take AbbVie's triple drug cocktail, with or without ribavirin, longer to get approved by the FDA. However, if approved, it stands a better chance of winning the race for market share in the HCV market.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.