The Hep C Race Is Heating Up: AbbVie Vs. Gilead

In January, AbbVie (NYSE:ABBV) released positive results from the remaining Phase 3 studies of its all-oral hepatitis C regimen and said it will start submitting applications to the FDA early in the second quarter. Assuming a favorable response, AbbVie could start marketing the drugs in late 2014.

Meanwhile, Gilead (NASDAQ:GILD) is planning to submit in the first quarter an FDA application for a fixed-dose combination of the recently approved Sovaldi with the NS5A inhibitor ledipasvir.

Both companies have a breakthrough designation from the FDA.

Both the AbbVie and Gilead hepatitis C regimens appear effective, with cure rates in the high 90 percent range for both new-to-treatment and previously treated patients. AbbVie's combinations seem especially effective for the seriously ill segment of the patients.

The Gilead regimen consists of a single pill taken once daily plus ribavirin, if needed, which adds an additional pill taken twice daily.

AbbVie's regimen requires two pills to be taken in the morning, plus another pill at night. Again, if ribavirin is necessary, it's additional. AbbVie said it is working on a coformulation, to consolidate the pills in the future.

AbbVie

AbbVie calls its multinational HCV program the largest all-oral interferon-free clinical program in Genotype 1 patients conducted to date.

Genotype 1 is the most prevalent genotype in the developed world, and is roughly evenly distributed between Genotype 1a and 1b. AbbVie's Phase 3 program enrolled 2,300 patients at clinical sites in 25 countries.

The goal was to maximize SVR (sustained virologic response) rates across various patient types, from patients who are new-to-treatment to the most difficult ones to treat, such as nonresponders to interferon-based therapy and patients with advanced liver fibrosis or cirrhosis.

Late last year AbbVie released results from the Sapphire trials, which showed that the therapy plus ribavirin, in both new and previously treated patients, produced very high SVR rates of 96 percent.

In January the company reported results from the four remaining Phase 3 trials.

The 380-patient Turquose-2 study is the only dedicated trial of an all-oral therapy in the difficult to treat cirrhotic patient population. Results from the trial show that 92 percent of the patients treated with AbbVie's combination for 12 weeks achieved SVR12 and 96 percent of the patients treated for 24 weeks also achieved SVR12.

These results represent a competitive advantage in marketing. Cirrhotic patients have traditionally been the hardest to treat, and certainly with the aging of the population, the rates of cirrhosis will rise. The data from this trial are going to be of critical value to clinicians, patients and payers. The results are unprecedented, and superior to anything currently available.

Results from the Pearl 2 study showed that 100 percent of Genotype 1 previously treated patients treated with AbbVie's combination without ribavirin achieved SVR12.

Results from the Pearl 3 trial showed that 99 percent of Genotype 1b new-to-treatment patients treated with or without ribavirin achieved SVR12. The efficacy in the Genotype 1b population is particularly encouraging as it represents roughly half of the Genotype 1 patients in the G7 markets.

The Pearl 4 study involved an even more difficult to treat segment of the Genotype 1a patients. 97 percent of patients treated with the therapy and ribavirin achieved SVR12, and 90 percent of the patients in the ribavirin-free arm achieved SVR12.

Once the drugs approved, the most advanced Hep C patients, who have fibrosis or cirrhosis are the most likely to be treated first and AbbVie's combination will likely be high on the physicians' list.

Japan is the second largest HCV market globally, therefore AbbVie pays special attention to it. A Phase 3 was recently started with a 12-week, ribavirin-free treatment focusing on Genotype 1b. Submission of the regulatory application in Japan is expected in 2015.

Gilead

The U.S. launch of Gilead's Sovaldi was a success: sales in December totaled $136 million.

A little over half of that amount is attributable to the initial inventory build-up by the big three wholesalers, amounting to nearly $70 million. A one-off order for $15 million was for a clinical trial. The balance of the revenue, about $50 million, is the actual patient demand.

Sovaldi prescribing has been broad-based across physician groups: hepatologists, gastroenterologists, IMs, and infectious disease specialists have all begun using Sovaldi.

Sovaldi for Genotypes 2 and 3 were expected to be the most popular use since these patients can be given an all-oral regimen, without the use of interferon.

But it turns out, from a survey conducted at the beginning of the year, Genotype 1 is the most widely used category. This is in line with the majority of the U.S. HCV population, of which approximately 70 percent is Genotype 1.

The most popular treatment regimen for these people was the Neutrino approach, a combination of Sovaldi with pegylated interferon and ribavirin for 12 weeks. Some patients were given a combination of Sovaldi and Olysio, another newly approved drug made by Johnson & Johnson (JNJ).

Gilead is not aware at all of any sort of secondary warehousing of patients by doctors, meaning to let them wait for the next generation of interferon free drugs to arrive. Physicians, both in the U.S. and Europe, are happy about the availability of Sovaldi and use it to the maximum.

In January the European Commission approved Sovaldi and it was launched in the U.K., Germany, and France.

On the payer front, it typically takes between 3 to 6 months to complete a formulary listing, but currently, almost without exception, Sovaldi prescriptions are approved by commercial plans, with prior authorization. There is already some use by state Medicaid plans and by the Department of Defense's Tricare program.

Gilead has a U.S. patient assistance program for Sovaldi, called Support Path, which has been very active since launch. This program helps patients to navigate benefits coverage, as well as provide assistance with copays and foundation grants. It is anticipated that 30 to 50 percent of commercial patients will utilize the copay assistance program.

In Europe, bottles of Sovaldi began shipping immediately after approval, and so far orders have been filled in the U.K., Germany, France, Austria, Sweden, and Finland.

In some countries, like France, orders from hospitals were received and filled even before approval, on the basis of a temporary authorization program. The urgency is not surprising, since patients with advanced disease have very limited alternatives.

What about the high price of the drug?

Gilead does not see any problem with payers. The company says that Sovaldi is not a high priced drug that extends the life of patients by a few months: it is a cure. And cures are respected by payers everywhere.

Next

The Hep C developers are not slowing down, 2014 is going to be a busy year for them.

Gilead: Based on the promising data obtained from the studies of ION1, ION2, and ION3, application to the FDA and the European Marketing Authorization will be filed this quarter. The studies investigated the fixed-dose ledipasvir/sofosbuvir combination in Genotype 1, new-to-treatment and previously-treated patients, combined with or without ribavirin for a duration of 8, 12, or 24 weeks.

The response rates in the 8- and 12-week arms evaluating the once-daily combination of ledipasvir and sofosbuvir without ribavirin ranged from 93.6 to 97.75 percent.

But the company is not stopping there. They are busy working on another fixed dose combination for Genotype 1, the so-called 5816 compound combined with Sovaldi. Early data will be presented at the EASL, the International Liver Congress in April.

Gilead is also making efforts to shorten the treatment duration even further, to six weeks, by adding a third drug.

Gilead is also planning an educational and advertising campaign, starting in mid-2014, to reach the huge potential audiences affected by Hep C. The campaign will be addressing first the diagnosed population, an estimated 1.7 million people, and later an even larger audience of an estimated 4 million, who are not or vaguely aware of their problem and of the new treatment options now available. For the campaigns some collaboration will be given by governmental agencies.

AbbVie is working on a Phase 2 program of its next-generation compounds, which include a potent protease inhibitor, ABT493, and the new NS5A inhibitor, ABT530.

The goal is to develop a ribavirin-free once daily combination that can be uniformly used for all genotypes.

In preclinical studies, the next-generation assets have shown good activity against key resistant mutants. They also support once daily dosing without ritonavir and have the ability to coformulate. AbbVie will present data about them later this year.

AbbVie is also working on creating a fixed dose combination for its current treatment, by taking all three of the current direct acting antivirals and coformulate them into a once-daily pill. The prototype formulation is ready and being tested. The program is aggressively advanced by the company.

Markets

In Hep C Gilead's Sovaldi leads the pack, with sales expected to top out at $7 billion a year once the company rolls out its fixed-dose combo.

AbbVie's three-drug regimen is expected to bring in about $3 billion at its peak, but the prospect of an eventual price war could shift the balance of power once the two companies get a chance to fight it out side-by-side in the marketplace.

According to the Centers for Disease Control and Prevention, about 3.2 million Americans are infected with the hepatitis C virus.

Hepatitis C is a viral disease that causes inflammation of the liver that can lead to diminished liver function or liver failure.

Most people infected with the hepatitis C virus have no symptoms of the disease until liver damage becomes apparent, which may take several years. Most of these people then go on to develop chronic hepatitis C. Some will also develop scarring and poor liver function (cirrhosis) over many years, which can lead to complications such as bleeding, jaundice (yellowish eyes or skin), fluid accumulation in the abdomen, infections or liver cancer.

The viral infection can lead to liver cirrhosis, and U.S. health officials recommended every American born from 1945 to 1965 to get tested for the disease.

The new combinations are projected to broaden the Hep C market which analysts estimate may reach $100 billion over a decade.

Investors' summary

AbbVie's full year 2013 earnings were $3.14 per share. Revenues grew 2.2 percent to $18.79 billion.

Humira, its principal product, sold $10.66 billion in 2013, or 56 percent of the total revenue.

In 2014 AbbVie expects a revenue of approximately $19 billion. The guidance excludes any potential revenue from the expected 2014 U.S. launch of the new HCV therapy as the approval date cannot be ascertained. The cost of investment, however, is already included in the expenses.

For the full-year of 2014, AbbVie's diluted earnings-per-share is forecast at $3.00 to $3.10 on an adjusted basis, or $2.63 to $2.73 on a GAAP basis.

AbbVie's pipeline represents significant potential. The company's late-stage pipeline includes several compounds in Phase 3 development targeting therapeutic areas like hepatitis C, immunology and endometriosis.

AbbVie is closing its first full year as an independent company since its separation from Abbott Laboratories (ABT). The company has several promising new endeavors, Hep C being the brightest among them.

The Hepatitis C race is heating up with Gilead in the leadership position, but AbbVie is not far behind.

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.