Gilead Drops as Patients Relapse on Hepatitis C Drug

Gilead Drops as Patients Relapse on Hepatitis C Drug

Gilead Sciences Inc., which fueled a
land grab for hepatitis C therapies with its $10.8 billion
purchase last year of Pharmasset Inc., dropped the most in more
than three years after some patients on the acquired
experimental medicine relapsed after stopping therapy.
Among eight patients with hepatitis C genotype 1, the most
common form of the disease in the U.S., six had a viral relapse
within four weeks after stopping a 12-week regimen with the
medicine, GS-7977, plus ribavirin, Gilead said today in a
statement. The other patients in the trial are two weeks out
from stopping treatment, and haven’t relapsed, the company said.
Gilead fell 13 percent to $47.69 at 9:48 a.m. New York
time, after earlier sinking to $45.60 for the biggest intraday
decline since Sept. 29, 2008. The shares of the Foster City,
California-based company had gained 39 percent in the 12 months
before today. Rival makers of hepatitis C drugs rose.
“Gilead announced what is unquestionably bad news,” Mark
Schoenebaum, an analyst with ISI Group in New York, wrote in a
note to clients today. The results could mean this kind of
therapy “isn’t going to be enough in genotype 1 patients.”
The promise of a potential $20 billion market in hepatitis
C, a bloodborne virus carried by 170 million people worldwide,
has spurred three acquisitions in the last year.

Bristol, Roche

Bristol-Myers Squibb Co. followed Gilead with a $2.5
billion purchase of Inhibitex Inc. to gain a similar medicine to
Pharmasset’s, while Roche Holding AG bought experimental
hepatitis C drugmaker Anadys Pharmaceuticals in November for
about $230 million.
Pharmasset’s medicine was thought to be the cornerstone of
new regimens that treat hepatitis C orally, said Raghuram
Selvaraju, an analyst with Morgan Joseph TriArtisan in New York,
in an interview.
Achillion Pharmaceuticals Inc. and Idenix Pharmaceuticals
Inc., other developers of medicines for the disease, are
probably acquisition targets, Selvaraju said. Achillion, based
in New Haven, Connecticut, rose 23 percent to $10.75, after
earlier reaching $11.14 for the biggest intraday increase since
December 2009; Idenix, in Cambridge, Massachusetts, increased
5.3 percent to $12.07. Medivir AB, a Swedish maker of an
experimental hepatitis C medicine in collaboration with Johnson
& Johnson’s Tibotec unit, advanced 9.2 percent to 62.25 kronor.
Vertex Pharmaceuticals Inc., also in Cambridge, joined
Merck & Co. last year in gaining approval for the first new
hepatitis C drugs in almost a decade. Its shares jumped 6.7
percent to $39.99.

Vertex Response

“The Gilead news is positive for Vertex’s investor
sentiment,” Jason Kantor, an analyst with RBC Capital Markets,
wrote in a research note today. “While we think other upcoming
data from Gilead will likely be more positive and 7977 is still
the best HCV drug to date,” the negative data “may likely call
into doubt the thesis that Incivek will essentially go to zero
in 2014.”
A developing medical theory that hepatitis C can be
overcome with the same type of drug cocktails that tamed HIV has
driven acquisition strategies as companies try to anticipate
which products work best with other medicines.
Because only a few hepatitis C drugs are approved, and
others in testing may not pan out, “we don’t know what the
winning formula will be,” Ben Weintraub, an industry analyst at
Wolters Kluwer InThought in New York, said during a Bg
Industries panel last week. To raise the odds, “companies are
doing M&A and starting new trials on almost a daily basis.”
While the results announced today by Gilead
“disappointed,” a “disaster scenario is unlikely,” said
Robyn Karnauskas, an analyst with Deutsche Bank in New York, in
a note to clients.

Future Trials

The data were from a study in patients who hadn’t responded
to an earlier treatment involving interferon. Gilead will
consider combining other direct-acting antivirals with 7977 and
longer treatment times, company executives said on a conference
call today with analysts and investors.
“These data answer an important question about the use of
GS-7977 and ribavirin for the treatment of genotype 1 null
responder patients, suggesting that additional direct acting
antivirals may be necessary to effectively treat this patient
population,” Norbert Bischofberger, Gilead’s chief scientific
officer, said in a statement.
“We will continue to explore a number of therapeutic
approaches to address this significant unmet medical need,
including combinations with other oral antivirals,” he said.