Gilead benefits from Bristol-Myers’ stumble in hep C chase

Gilead Sciences’ high-risk and expensive bet on an early-stage hepatitis C antiviral has become easier to justify. With one of its chief competitors, Bristol-Myers Squibb, abruptly sidelined in the chase for an all-oral regimen, its shares rose 9% to a record $58.61 in early trading today; Bristol-Myers was down 6% to $33.40.

After recent knocks to some of the most closely watched hep C candidates, hopes are dissipating that many companies will be able to play in this space. And it is looking like the $11bn price Gilead paid for Pharmasset was a necessary evil in securing a resilient candidate in GS-7977.

Big buy

Bristol-Myers said it was suspending administration of BMS-986094 in a phase II study in combination with the NS5A inhibitor daclatasvir, based on a “serious safety issue”, reported separately as heart failure in a single patient in a group taking a 200mg dose.

The New York group disclosed little beyond this announcement, made late on Wednesday, other than to note that the relationship to ‘094 was not known and that all other patients were being assessed. The drug, an NS5B inhibitor, was acquired with the $2.5bn buyout of Inhibitex this year (Bristol-Myers Squibb lays claim to new hep C stake with Inhibitex buyout, January 9, 2012). Based on preclinical work indicating toxicity in certain cell lines, safety questions had hung over the candidate.

The phase II programme included doses up to 200mg, where the Bristol-Myers drug achieved “Gilead-like potency”, but where the safety concerns were greatest, ISI Group's analyst Mark Schoenebaum said today.

At the time of the Inhibitex acquisition, ‘094 had been tested on just 64 patients, with only 16 having received more than 100mg. By comparison, the ‘7977 safety database currently has around 900 patients, Mr Schoenebaum said.

Bristol-Myers was compelled to study the daclatasvir combination by Gilead’s departure from a collaboration of daclatasvir with GS-7977 (EASL - Gilead-BMS score all-oral hep C win but will pairing last?, April 19, 2012).

Analysts were quick to write off BMS-986094 today as another blow to sentiment for the field. This week has seen Vertex report disappointing sales of its groundbreaking hep C antiviral Incivek and Novartis return all rights to Idenix’s hep C candidate (Signs are growing that the hep C ship is sailing, August 1, 2012).

Given where the two parties stood in the all-oral sweepstakes, Bristol-Myers’ success now appears to be dependent on a miscue or a safety issue arising from Gilead’s hep C late-stage programme. This is reliant on a NS5A called GS 5885 in place of daclatasvir and phase III trials will start by year end.

Analysts from UBS wrote that the Bristol-Myers misstep could mean an additional $1bn in sales for the Gilead hep C franchise, which already has an EvaluatePharma consensus forecast of $5.33bn in 2018. GS-7977 is expected to become the best-selling drug for the California group, which has made a name for itself as an AIDS specialist.

Winners and losers

Other beneficiaries might include Abbott Laboratories, which has promising combinations containing a backbone of the protease inhibitor ABT-450 and its own NS5B inhibitors ABT-333 and ABT-072; shares in the Illinois company were up 1% to $66.88 in early trading today.

However, what is becoming clear is the need to get onto the market within the next two years or risk being forever left behind. With the direct-acting antiviral path already paved by Incivek and Merck & Co’s Victrelis, many patients who had been awaiting better treatment regimens may have already sought care since those two compounds were launched.

There is a belief that many more are warehoused, awaiting a regimen completely free of interferon and its unpleasant side effects; the US Centers for Disease Control and Prevention earlier this year recommended that all baby boomers get a one-time hep C test; the agency says 1 in 30 in that age group has been infected, making for a rather large group of patients, although it is not altogether clear how accurate this estimate is.

Thus, a superior treatment protocol with a clean side-effect profile could benefit from treating the pig in the python – and might explain why Gilead has been so eager to open the throttles in bringing ‘7977-based regimens to the market (Gilead pushes forward on short but risky path to hep C validation, July 27, 2012).

Though the Pharmasset buyout is looking like rather good business acumen at this point, Gilead has no doubt benefited from some good luck; it would have been difficult to predict that the BMS compound would meet such an obstacle so quickly.

Indeed, Bristol-Myers’ gamble could have looked like a smart one if the safety worries had been fleeting. Hep C has clearly been a high-risk game for the last year or so; there were bound to be winners and losers.

To contact the writer of this story email Jonathan Gardner in London at jonathang@epvantage.com

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