If there is anything that the acquisitions of Pharmasset and Inhibitex for their phase II hepatitis C candidates have taught the pharma world, it is that the price tag for such assets for now is followed by nine zeroes. This is happy news for the shareholders and management of Idenix Pharmaceuticals and Achillion Pharmaceuticals, who are expecting to report key phase II data for their most advanced products early this year.
Share prices for the two companies were dragged upward in the slipstream of Bristol-Myers Squibb’s acquisition of Inhibitex announced over the weekend, with Idenix rising 34% to $9.41 and Achillion up 14% to $9 in early trading today. If there is a bubble in the market valuation of companies specialising in hepatitis C, it shows no sign of deflating just yet; however, companies sitting atop it need to hope they are able to capitalise on the optimism before any clinical failure or investor disillusionment can set in. Meanwhile, as big pharma consolidates its position in hepatitis C, it is appearing that five companies will be battling for market share.
Bristol-Myers will snap up Georgia-based Inhibitex for $2.5bn, or $26 a share, a 163% premium on Friday’s closing price. It comes close on the heels of Gilead Sciences' eye-watering $11bn purchase of Pharmasset, an antiviral specialist company that has developed a speciality in hepatitis C polymerase inhibitors (Gilead betting the Pharmasset on hepatitis C, November 21, 2011).
Inhibitex’s chief asset is INX-189, an inhibitor of the NS5B polymerase; Bristol-Myers has similar products in the form of its phase III candidate BMS-790052 and phase II candidate BMS-791325, both NS5A inhibitors. Few analysts put forecasts on the Inhibitex drug, but Canaccord is expecting blockbuster sales of $1.27bn in 2017 following a 2015 launch.
With the introduction last year of the first two protease inhibitors in the forms of Incivek and Victrelis, the hope has been that new antiviral agents may be added on to develop drug-cocktail combinations that could reduce the use of interferon in the standard of care, and thus reduce the side effects of that cytokine (EASL - Beyond protease inhibitors hep C pipeline filling up, April 4, 2011).
Certainly Bristol-Myers, which was rewarded by investors for its deal making acumen and R&D success last year, is thinking that INX-189 will be a useful compliment to its current pipeline in developing combination strategies (Big pharma stocks end year on a high note; BMS and Elan stand out, January 5, 2012).
As several of the phase II products are due to report key data in coming months, the landscape for combination strategies is likely to become clearer by year’s end. The Pharmasset-originated PSI-7977, for example, has an ambitious 1,300-patient phase II programme of seven trials in different settings with different combinations, all of which will likely report data in the next year or so. Idenix’s phase IIb trial of IDX184 will be reporting data throughout the year; not missing a trick, Achillion today reported 12-week data on its protease inhibitor ACH-1625.
Whilst the landscape for interferon-free regimens has yet to become clear, what is clear is the battle for market share amongst the big pharma players. Johnson & Johnson, with its non-North American rights to Incivek and rights outside of Scandinavia to TMC435, has a huge position in protease inhibitors.
A Roche-Merck & Co dyad of interferon and Victrelis has sought to ring fence the two companies' respective claims -laying aside their previous rivalry in interferon products, whilst Merck & Co's Victrelis has been on the back foot in competition with Incivek because it is perceived as a less effective drug (Merck and Roche strive to level playing field with hep C pact, May 18, 2011).
Meanwhile, Bristol-Myers and Gilead appear to be fighting it out in the next big drug class, the polymerase inhibitors, with perhaps some players yet to be named laying claim to the Achillion and Idenix assets.
Those two are obvious candidates for a bid and given Merck's continuing interest in hepatitis C - Pegintron is forecast to be the New Jersey company's 11th biggest seller in 2016 - and its need to beef up its pipeline it too could consider opening its wallet (Merck fails to excite market with job cuts, August 1, 2011).
And Vertex Pharmaceuticals, which is expected to see US Incivek sales peak at $2.4bn in 2013, may desire another follow-on to complement NS5B inhibitor VX-222. The zooming success of Incivek this year will certainly give the Massachusetts group the cash to make further acquisitions (Incivek set to break record for fastest product launch, November 3, 2011).
Given the huge exposure in phase II, there will no doubt be some failure and perhaps some surprising clinical success this year. It appears as though many of the players have claimed their stakes, but big pharma's chequebook will remain open.