The Street.com: Rethinking Idenix Pharma in Wake of Bristol's Hep C Blow Up...

Posted 8/6/12 on The Street.com. The Streets's Nathan Sadeghi -Nejad weighs in on the current - and seemingly hyperactive - HCV drug development space. He's right, the last couple of weeks have been a whirlwind of surprises - Novartis giving Idenix the rights to it's HCV drugs back, BMS's BMS-094 seemingly taking it's last breath, Gilead co-formulating it's nuc with it's NS5A inhibitor just to name a few.  BMS has had a rough time of it in the HCV drug development space. It's $885 million purchase of ZymoGenetics with it's Peg Lambda seemed like a great move in 2010, before the advent of the idea of potential interferon-free therapy (I still think Peg Lambda may be a surprise dark horse - I'm still cautious on the potential 'interferon free' except in certain cases), Then consider the $2.5 billion purchase of Inhibitex, whence the doomed BMS-094 nuc came from leaving BMS's NS5A inhibitor without a BMS-owned partner. It's other late-stage HCV drugs aren't much to sneeze at. Ouch. Sadeghi-Nejad makes some other observations (Gilead - yes. Idenix - nuc is too close to BMS-094, maybe a toxicity issue but no safety signals to support. Vertex nuc looks powerful, but too far from market to mean much) that you may or may not agree with. Definitely a good read if you're watching the HCV drug development race.

Rethinking Idenix Pharma in Wake of Bristol's Hep C Blow Up

By Nathan Sadeghi-Nejad - 08/06/12 - 7:00 AM EDT
Tickers in this article: IDIX BMY GILD VRTX

NEW YORK (TheStreet) -- Last week, Bristol-Myers Squibb(BMY) confirmed my previously reported suspicions by abruptly halting a Phase II trial of BMS-094 (formerly INX-189) -- a nucleotide polymerase inhibitor, or "nuc," for the treatment of hepatitis C. One patient in the study experienced major cardiovascular toxicity, forcing Bristol-Myers to stop dosing BMS-094.

The company has provided few follow-up details but it appears as if BMS-094 is dead.

That means Bristol-Myers' $2.5 billion acquisition of Inhibitex (from where BMS-094 originated) has proven to be a complete zero in less than seven months. I'm not sure if that's a mergers-and-acquisition disaster record, but it's probably close.

The demise of BMS-094 has also reshaped the Hep C landscape. Let's review who still stands and where. For some assistance, I turned to John Tucker, a scientific analyst with BioMedTracker, a division of Sagient Research. Tucker recently published an excellent overview on Hep C drugs in development and he's been all over BMS-094 and its implications.

At this point, combining a "nuc" with an NS5A inhibitor and the generic antiviral drug ribavirin seems to be the most promising "all oral" Hep C regimen in clinical development. This makes Bristol-Myers' daclatasvir, an NS5A inhibitor essentially useless on its own. The company's other later-stage hep C drug candidates -- the non-nucleoside polymerase inhibitor BMS-791325 and the protease inhibitor asunaprevir -- have only modest efficacy or toxicity issues, or both.

Bristol-Myers may continue to beg but I'm convinced Gilead Sciences(GILD) has no interest in a daclatasvir partnership. As I noted recently, Gilead's nuc-NS5A combination -- GS-7977 and GS-5885 -- has made rapid clinical progress and will start pivotal trials this year. In sum, the BMS-094 blowup leaves Bristol-Myers up a proverbial creek in Hep C. Although this failure has little long-term financial impact, Bristol-Myers' apparent inability to foresee this compound's risks raises concerns about the company's R&D and business development capabilities.

Gilead emerges a big winner. I have long believed Gilead would be first to market with an all-oral Hep C regimen, but Bristol-Myers has handed the company a much bigger lead. (I also still doubt the size of the commercial market for Hep C, but that's another issue.)

I initially considered Idenix Pharmaceuticals(IDIX) and its nuc IDX-184 a winner emerging from the BMS-094 blowup. Now, I'm less sure.

IDX-184 has a chemical structure that is similar to both BMS-094 and Pharmasset's PSI-938, another Hep C nuc that was killed off by toxicity problems last year. More specifically, the active moiety of IDX-184 -- the part of the molecule that makes the drug work -- appears to be similar to the active moieties of both BMS-094 and PSI-938. That could be a big problem.

Chemists often attach nonessential atoms to a drug candidate in an attempt to change the compound's overall physiological behavior. As the drug is metabolized in the body, those byproducts are cleaved and the working core of the drug -- the active moiety -- is unveiled.

The byproducts are usually innocuous, but not always. For example, it's not clear whether the side effects that killed BMS-094 were caused by the active moiety or by 1-naphthol, a toxic metabolite of the drug. Similarly, PSI-938's fatal flaw remains unclear. This worries me, and it should worry Idenix bulls.

Idenix does have a very reasonable defense. Management contends IDX-184 is nearly entirely targeted to the liver and metabolized poorly in other cell types. Further, IDX-184 seems to be more slowly metabolized by the liver than BMS-094. These factors certainly lessen the risk of toxicity. Thus far, Idenix has treated roughly 60 patients for 12 weeks with IDX-184 and observed no safety signals, including no cardiovascular side effects.

That's encouraging, but I would prefer to overpay for Idenix after there are more data on IDX-184. I would reduce or eliminate long exposure to Idenix until the drug's safety has been more completely established.

Two more Idenix red flags that make me cautious: First, Novartis(NVS), Idenix's partner for nearly a decade, ended the relationship last week. I understand that Novartis wasn't much of a collaborator so walking away might actually be a net positive for Idenix. But I still tend to view pharma-biotech breakups as a negative, although in this case a bit less so.

Second, Idenix completed a major secondary offering only two days after the Novartis breakup. Idenix sold 22 million shares at $8.00 per share or 28% below recent highs. Although I generally support equity issuances at management's discretion, the company still had at least $90 million in the bank. Shareholders should feel justifiably frustrated at this seemingly unnecessary rush dilution of the existing investor base. I worry that the timing signals dark clouds on the horizon.

Right before the Bristol-Myers news, Vertex Pharmaceuticals(VRTX) announced impressive early clinical data for ALS-2200, a nucleotide analogue licensed from Alios BioPharma. After seven days of dosing, the eight treated patients showed a median 4.54 log reduction in viral load. That's near complete eradication of virus, for those of you unfamiliar with the logarithmic scale.

Unfortunately for Vertex, ALS-2200 has not cleared any meaningful long-term safety hurdles and the drug remains years behind Gilead's compounds. I would put Vertex on the "watch and wait" list, but that's it.

As I have discussed before, it's hard for me to get excited about the other Hep C players. Abbott(ABT) has a seemingly decent trio of drug candidates in later-stage development, but the impending spin off of AbbVie -- Abbott's pharma business -- makes the new company nearly completely dependent on the multi-blockbuster rheumatoid arthritis drug Humira.

Johnson & Johnson's(JNJ) TMC-435 looks solid but lacks an obvious companion unless the company partners with Gilead or physicians, on their own, decide to combine TMC-435 with Gilead's GS-7977 into an "off label" all-oral Hep C regimen -- an idea that BioMedTracker's Tucker believes is a real possibility. Finally, everyone wants me to like Achillion Pharmaceuticals, but there is no shortage of NS5A or protease inhibitors -- the company has two NS5As and a protease inhibitor -- so I can't get that excited.

Ironically given the longstanding investor skepticism, Gilead appears likely to dominate the Hep C market over the next decade. I still worry the company vastly overpaid for Pharmasset, but that concern will be meaningful only if something goes wrong and investors are looking for a cudgel with which to beat management. Otherwise, it's time for investors to start thinking logically about the real size of the Hep C treatment market. It's going to be hard for any company to make big money if there aren't enough Hep C patients to treat.

Disclosure: Sadeghi has no positions in any of the stocks mentioned in this article.

Original article: The REAL drug to beat in Hepatitis C treatment: Ribavirin

An article I authored and recently published online thanks to the great folks at GastroHep.tv, a multi-media, cutting edge online resource for the Gastroenterology and Hepatology community. 



The REAL Drug to Beat in Treating Hepatitis C: Ribavirin

by Chris Barnes

By now, most of us are aware – some of us painfully so – that the Hepatitis C drug development market is red hot. Investors and developers alike need a scorecard to keep track of who is buying who and for what potential blockbuster drug in the race to make it big in treating Hepatitis C.  All of this hullabaloo is for good reason – the CDC estimates there are over 170 million people infected with Hepatitis C worldwide[1], a vast majority of them don’t know that they have it.  That is paradoxically both an enormous and lucrative problem. This means there are a lot of potential patients for pharmaceutical companies to treat with blockbuster anti-HCV drugs.

The names of the compounds in development are like alphabet soup – GS-7977, VX-222, BMS-790052, BI-201335, TMC 435, BL-8020… protease inhibitors, polymerase inhibitors, cyclophilin inhibitors… the list goes on and on. This is a good thing for both drug makers and patients. Drugs to treat Hepatitis C are becoming more potent and more tolerable.  And the race for the next blockbuster drug means there is no shortage of drugs and drug classes to choose from.  Drug developers may even realize the holy grail of Hepatitis C treatment – an all oral, interferon-free regimen consisting of 2-4 pills a day. That’s right, no shots, no interferon. This would potentially make treatment for Hepatitis C infinitely more tolerable for patients.

So the HCV drug development biz is booming… but the hottest drug to beat in Hepatitis C?  Ribavirin.  A cheap, generic anti-viral. It turns out that even with all the advances drug makers are realizing in interferon-free drug combinations, ribavirin is critical to the success in curing patients of Hepatitis C.   The trouble is that no one is really sure how ribavirin works. All we know is that treatment response rates are infinitely higher when it is part of a Hepatitis C antiviral regimen.[2][3][4]

Researchers are busy trying to find out just what makes ribavirin tick, but let’s look at a few of the current theories on how the drug works:

Ribavirin may cause something called ‘error catastrophe’ in the lifecycle of the HCV virus.[5]Ribavirin is a nucleoside analog – this means that ribavirin can fool the virus into thinking that it’s one of the building blocks needed for the virus to replicate. So when the virus tries to replicate itself, it picks ribavirin as a building block instead of the real thing. This mucks up the replication process leading to ‘error catastrophe’ – in other words, the virus is no longer able to make copies of itself.
Inosine monophosphate dehydrogenase (IMPDH). That’s a tongue-twister to be sure, but it’s also a cellular enzyme the human body makes and the HCV virus needs. Ribavirin may inhibit this enzyme, which consequently shuts down the energy supply the Hepatitis C virus requires to survive and replicate.[1]
The Hepatitis C virus is sneaky. It has a peculiar knack for evading the body’s immune system[2], so anything that might disrupt that ability would be very valuable to an anti-HCV regimen. It turns out that ribavirin may have this unique ability by helping the body mount a specific anti-viral response to the Hepatitis C virus, which is essential in fully clearing the virus. [3]
While ribavirin’s exact mechanism of action remains a mystery, there is one thing we do know for certain – we need ribavirin to fight Hepatitis C. Paring ribavirin with the above new antiviral compounds currently in development – called Direct Acting Antivirals  or DAAs -  that target and disrupt numerous points in the lifecycle of the virus, lead to significantly better cure rates then just using the DAAs alone. While interferon may go the way of the buffalo, it appears that the lowly, unsexy ribavirin is here to stay.  This makes ribavirin the REAL drug to beat in the Hepatitis C drug development marketplace.

References

[1] Perz JF, et al. The contribution of hepatits B virus and hepatitis C virus infections to cirrhosis and primary liver cancer worldwide. J Hepatol 2006; 45: 529-38

[2] Vertex Pharmaceuticals, Inc. (2010)  Vertex adds ribavirin in additional treatment arm in ongoing phase II VX-222 & Telaprevir combo trial. [Press Release] Retrieved from http://viralmatters.blogspot.com/2010/11/vertex-adds-ribavirin-in-additional.html

[3] Hezode, Christopher, et al. (2009) Telaprevir and Peginterferon with or without Ribavirin for chronic HCV Infection. Retrieved from http://www.nejm.org/doi/full/10.1056/NEJMoa0807650

[4] Smith, M. (2012). New Combo KOs HCV Without Interferon, Ribavirin  [Online article] Retrieved from: http://www.medpagetoday.com/InfectiousDisease/Hepatitis/30739

[5] Maag D, et al. RNA virus error catastrophe: direct molecular test by using ribavirin. Proc. Natl. Acad. Sck. 2001; 98: 6895-900