What Everybody Ought to Know About Gilead and Johnson's New Hepatitis C Drugs

 Investment Commentary

What Everybody Ought to Know About Gilead and Johnson's New Hepatitis C Drugs

By Todd Campbell
December 6, 2013

A new class of oral drugs for curing hepatits C is hitting the markets this winter, displacing injectible predecessors and ushering in treatments that are shorter and in some cases avoid side-affect riddled interferon.

1. They work better, but not for everyone

This new class of drugs is more effective than the prior-generation injectibles, which include Incivek, now fully controlled by Johnson following Vertex's exit, and Victrelis, made by Merck. Both Gilead and Johnson's new drugs are approved for 12-week treatment courses, far shorter than the 24- to 48-week courses for those predecessors. But both Gilead's and Johnson's drugs don't cure everyone.

In studies, Gilead's sofosbuvir, which will likely be approved as a combination therapy alongside ribavirin, cured roughly 89% of patients with genotype 1, the most common genotype in America. Based on Phase 3 results, Johnson's Olysio cures 84% of cases, but stumbles in patients with the Q80K polymorphism, curing just 58%.

"Given the high frequency of the Q80K polymorphism in the U.S. population and its significant impact on rates of SVR12, DAVP is recommending that all GT1a patients be screened for the Q80K polymorphism. Alternative treatment options should be considered for patients found to be infected with this polymorphic variant," according to the FDA's advisory panel committee recommendation.

That should significantly reduce Olysio's appeal, given that nearly 50% of those with hepatitis C, genotype 1 have Q80K.

2. They come with fewer side effects, but still rely on interferon and ribavirin

The target for all of these drugmakers remains a therapy that is free of side-effect laden interferon and ribavirin. If approved on Dec. 8, Gilead's drug will do away with interferon in treating patients with hepatitis genotypes 2 and 3, but interferon will still be dosed alongside ribavirin for the majority of Americans. Meanwhile, Johnson's Olysio still relies on both interferon and ribavirin.

One of the closest to a truly interferon- and ribavirin-free therapy appears to be Bristol. Bristol's drug daclatasvir is being considered for approval in Japan for use in combination with Bristol's asunaprevir for the tough-to-treat genotype 1b population. That population accounts for 70% of Japanese hepatitis cases. and Bristol's interferon- and ribavirin-free, two-drug combination cleared the disease nearly 85% of the time.

3. Fewer pills, easier regimen

It's not just interferon and ribavirin that make it tough for patients to stick to their drug regimen -- it's the dosing, too. The dosing of multiple drugs and injections with varying treatment schedules makes it hard for patients to adhere to protocols. That can cause them to drop out of treatment, fail to clear the disease, or worse, choose to avoid treatment altogether. As a result, drugmakers are focusing on one-pill solutions.

Unfortunately, current treatments from Gilead and Johnson are multi-pill, which is better, but not ideal. However, one pill treatments should be coming soon. In November, Gilead reported data from a Phase 2 trial showing that 95% of patients were cured by a single, once-daily pill combining sofosbuvir and another Gilead drug, ledipasvir.

4. Increasingly expensive treatment

Some doctors will embrace off-label combinations of sofosbuvir with either daclatasvir or Olysio. Those combinations have shown impressive results in Phase 2 -- so impressive that European regulators have given the nod for compassionate use of daclatasvir, despite Bristol not yet filing for EU approval.

Interim data from a Phase 2 trials combining Olysio with sofosbuvir in patients with liver disease who had failed prior treatment are also remarkable. In that study, the combination delivered a 100% cure rate four weeks following a 12-week course of treatment.

While those combinations offer hope for the most critical cases, they pose a big question for patients and insurers. Analysts peg pricing of Olysio at $67,000 for 12 weeks, and estimates for sofosbuvir are running as high as $100,000 for 12 weeks. For comparison, the cost to treat patients with an interferon and ribavirin combination runs roughly $15,000 to $20,000.

5. Hypercompetitive marketplace

Gilead, Johnson, and Bristol are looking over their shoulders at AbbVie and Merck. Both companies have promising late-stage trials ongoing for treating hepatitis C, with AbbVie guiding for a Q2, 2014 filing with the FDA. In a Phase 3 trial, AbbVie's 3 drug, non-interferon, combination cured 95% of patients with genotype 1. And Merck's MK-5172, combined with MK-8742, produced a cure rate between 96% and 100% in a small Phase 2 trial, prompting the FDA to grant the therapy breakthrough status.

That means investors, patients, and doctors have a lot to consider over the coming year as all these contenders vie for a share of a market Express Scripts thinks will quadruple by the end of 2015.

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