Warehoused Hep C Patients May Boost Merk, J&J, Vertex

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‘Warehoused’ Hepatitis C Patients May Boost Merck, J & J, VertexApril 18, 2010, 8:37 PM EDTBy Fay Cortez and Naomi KresgeApril 19 (Bloomberg) -- At Fred Poordad’s bustling hepatitis C clinicin the heart of Los Angeles, one in every five patients receives notreatment. They are waiting for a wave of new drugs, expected in thenext 18 months, that may boost their chance at a cure by as much as10-fold.The medicines also may bolster the prospects of Merck & Co., VertexPharmaceuticals Inc. and & , the companies in a race toget the first new treatment to the market in a decade. About half ofpatients can’t tolerate the side effects of existing therapies, whichgenerate $2 billion annually in sales. The new drugs could expand themarket to $10 billion in five years, said Geoff Porges, an analyst forSanford C. Bernstein & Co. in New York.They’re just the first among new therapies anticipated in the nextfive years as companies seek a single pill to cure the infection.Poordad, chief of hepatology at the Liver Disease and TransplantCenter at Cedars-Sinai Medical Center in Los Angeles, doesn’t objectwhen his patients elect to wait for the new drugs, a practice known as“warehousing.”“The warehousing has been going on for the past year or so,” Poordadsaid. “I think we’ll see a tremendous increase in the volume ofpatients that are treated. That’s the most exciting thing in the fieldfor a long time.”The drugs closest to market, Merck’s boceprevir and telaprevir fromVertex and & , are protease inhibitors crafted from thetechnologies that led to discoveries made in the fight against HIV.The new treatments are being tested as additions to current standardtreatments. Both drugs work by blocking the action of the proteaseenzyme the hepatitis virus needs to replicate, directly stopping itfrom spreading.Available by 2011Merck, of Whitehouse Station, New Jersey; Vertex, based in Cambridge,Massachusetts; and its partner & , of New Brunswick,New Jersey, have said they expect results from final-stage clinicaltrials by the second half of 2010, with submission to U.S. regulatorsby year-end. Patients can expect the drugs to be available by 2011,executives said on April 16 at the annual meeting of the EuropeanSociety for the Study of the Liver in Vienna.“We’re on the brink of a revolution,” Porges said in an interview atthe conference. “Investors have been waiting for this for six to sevenyears, and investigators and physicians have been waiting for almost10 years.” He has an “outperform” recommendation on Vertex and seesthe stock gaining 23 percent in the next year.Vertex shares rose 0.8 percent to $39.99 in Nasdaq Stock Markettrading on April 16. The stock has gained 43 percent in the last year.Scarring LiversMost of the 170 million people infected worldwide with hepatitis Cdon’t know they’re sick, while others fail to respond to existingdrugs or can’t tolerate their side effects. The virus is spread bycontact with infected blood. About 4 million Europeans and 3.6 millionAmericans have the disease, and only about 2 percent get treatment,according to Merck.The illness moves slowly, scarring livers over years or decades,giving doctors and patients a window of time. Once the liver isdestroyed, however, patients face cancer or organ failure, with feweffective treatments other than a transplant.The current standard of care is a combination of the generic antiviralpill ribavirin and interferon, an injection sold by Merck as Pegintronand Swiss drugmaker Roche Holding AG as Pegasys. The medications beefup the immune system, helping it clear the virus from the patient’sblood. They can also trigger anemia or make patients feel like theyhave a never- ending flu. The new drugs don’t erase those side effectsbut can cut treatment time in half, from a year to about six months.Rush for TreatmentThe protease inhibitors may have the biggest impact in those who havefailed prior therapy. Five to 9 percent of them are cured by a secondcourse of treatment with existing drugs. Adding a protease inhibitorappears to boost that number 10- fold, said Poordad, who hasparticipated in studies funded by Merck, Vertex and & .The first two or three new drugs will take the lion’s share of thegrowing market, Porges said, as warehoused patients rush to gettreatment and doctors establish a new standard of care.Vertex and & hold an advantage right now, Porges said,because their drug telaprevir doesn’t cause the same levels of anemiaseen as a side effect of its competitor from Merck. Vertex alsoallowed patients who didn’t respond at all to other therapies into itsclinical trials, possibly positioning its drug, which has been indevelopment for at least 12 years, for broader use.“We think that’s going to be an advantage,” said Bob Kauffman, chiefmedical officer at Vertex.Billion-Dollar BusinessHepatitis C is already a billion-dollar annual business for Merck andwill drive growth, said Bergstedt, the company’s senior vicepresident for vaccines and infectious diseases. The drugmaker acquiredmost of its treatment franchise in the $41 billion purchase last yearof Schering-Plough Corp.The three drugmakers lead a packed field of competitors. A half-dozenother approaches to curing the disease are in development, with about30 compounds being studied.At the liver conference in Vienna, the 1,000-seat conference roomdevoted to new drug development was overflowing. Doctors, researchersand investors lined the walls and sat in aisles as eight investigatorspresented data about the second wave of therapies following on the newdrugs’ heels.Among the most exciting are polymerase and NS5A inhibitors, compoundsthat also block viruses from replicating, said Heiner Wedemeyer,leader of the gastroenterology, hepatology and endocrinologydepartment at Hannover Medical School in Germany.‘Major Breakthrough’Though the three categories of compounds all prevent viruses fromcopying themselves, they work in slightly different ways. Doctors hopethat using them together could prevent patients from becomingresistant, a common problem with viral treatments, Kauffman said.“Now there is light on the horizon,” Wedemeyer said, adding that thefirst studies to combine only pills, without the side-effect-ladeninjections, are under way. “If this treatment really works, with noresistance emerging, it could be a major breakthrough.”Investigators aim in five or 10 years to be able to treat hepatitis Cwith just one or two pills, Bergstedt said. No one company has all thepieces of the puzzle in development yet, he said. They’re lookingaggressively for partnerships on experimental compounds.“We’d be stupid not to,” the Merck executive said. “Everybody’stalking to each other. Nobody really has all the assets at this stage,and everybody’s starting to position and starting to accumulate.”At the VanguardBristol-Myers Squibb Co. is at the vanguard of the nexttransformation, said Liang, a Boston-based analyst for LeerinkSwan & Co. While the New York-based company’s drugs are still in theearly stage of development, it’s taking a daring approach by combiningtwo of its oral medicines in a cocktail without interferon --potentially leapfrogging competitors whose individual therapies arefurther along.Bristol’s lead treatment is one of the first NS5A inhibitors. Rocheand Gilead Sciences Inc. are also aiming for oral combination drugs,and it’s essential to be one of the first, he said.The goal may be to get good enough results by the time the Merck andVertex drugs are introduced next year to prompt a second wave ofpatient warehousing, Liang said.“If you are Bristol or Roche, and you know you are behind, you aren’tgoing to catch the initial bolus,” he said. “What you try to do is getsome data and say, ‘Look, we have something better on the horizon.Don’t treat everybody. If you can wait, wait.’”--Editors: Phil Serafino, HallamTo contact the reporters on this story: Fay Cortez in Viennaat mcortez@...; Naomi Kresge in Vienna atnkresge@...To contact the editor responsible for this story: Phil Serafino atpserafino@...__________ Information from ESET Smart Security, version of virus signature database 5266 (20100709) __________The message was checked by ESET Smart Security.http://www.eset.com

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