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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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February 17, 2012

Hepatitis C: Reality Intrudes

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Posted by Derek

There's been a big drug development story over the last few months that I've been unable to comment on due to conflicts of interest. That situation continues, but I can point to the latest developments, for those who haven't been following the twists and turns.

Comments (29) + TrackBacks (0) | Category: Infectious Diseases


COMMENTS

1. josh on February 17, 2012 9:08 AM writes...

keeping an eye on Incivek (and VRTX for that matter) for the next few months.

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2. Biotechtranslated on February 17, 2012 10:26 AM writes...

Wow! One bad trial result in an especially difficult patient population and Gilead stock drops 17%.

Brutal.

Mike

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3. Calvin on February 17, 2012 10:49 AM writes...

Or another way to look at it Mike is that's the penalty you pay for cherry picking your patient population. Everybody knew that non-responders in HCV are hard to treat but are large and incredibly important group. But Pharmasset showed their fantastic data in treatment naives and Gilead bought it.

It's worth pointing out that this trial has had more than one slip up since Gilead coughed up the dough. PSI-938 was swiftly pulled after it showed liver tox fromthe combo trial with 977 (presumably to prevent both compounds being slapped with a clinical hold like Idenix)


Curiously, the market has wiped almost the same dollar value of Gilead as it took to buy Pharmasset. The HCV game has a long way to go. Nucs face the usual spectre of Phase 3 tox issues and nobody else has a combo on the market. Vertex and Merck have done an awesome job of actually getting a product to market and it's to be expected that it wont' be as easy as one might imagine to get further drugs to HCV patients.

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4. Anonymous on February 17, 2012 11:34 AM writes...

You would think that Gilead would have waited for the data before dropping 11 billion to buy this company. What a waste...

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5. MolecularGeek on February 17, 2012 2:33 PM writes...

It IS brutal. The failure with null responders doesn't mean that the compound is useless, just that it isn't the panacea that Gilead was hoping for. But, because companies that are actually trying to accomplish something of value to society are competing with meaningless real estate derivatives for investment funds, watch it get dropped by Gilead to cut their losses and appease short-term driven fund managers.

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6. Anon on February 17, 2012 3:52 PM writes...

Gilead will come up with a combination therapy with something else in their pipeline. Watch this space

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7. Anon on February 17, 2012 3:52 PM writes...

Gilead will come up with a combination therapy with something else in their pipeline. Watch this space

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8. Anonymous on February 17, 2012 4:21 PM writes...

If I were a Pharmasset employee, I'd be updating my CV. I could see them deciding to take their products and IP and jettison the people in an attempt to cut costs and recover some of what they lost.

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9. Tom Womack on February 17, 2012 6:24 PM writes...

Why were they testing polymerase inhibitor plus the nucleotide analogue ribavirin, rather than a polymerase inhibitor plus a protease inhibitor by analogy with the effective HIV cocktails?

(yes, they'd have to buy the protease inhibitor retail from Merck or Vertex; so be it)

Also, HCV patients are available by the tens of thousands - which is why it seemed a good commercial drug target in the first place - so why do you run a trial of what looks like a pretty decent candidate drug on only ten?

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10. Anonymous on February 17, 2012 6:27 PM writes...

Can someone remind me how Incivek fared in the same patient population?

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11. anchor on February 18, 2012 5:15 AM writes...

#9 spot on and I was thinking of the same. Companies like Achillion are a big beneficiary as they are trying out the combo of protease inhibitor and an NS5A inhibitor

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12. Calvin on February 18, 2012 8:42 AM writes...

Tom. Check out http://www.natap.org/hcv.htm You should find a good few articles on clinical trial design and why ribavarin is in there. Nobody is absolutely sure what it's doing but it has a big impact on resistance generation with polymerase inhibitors. Ribavarin doesn't seem to inhibit HCV polymerase itself. As for the non responder trial this is typically the way they are conducted and this was only one arm of a much bigger trial. But non responders are very important and quite a large patient population. If I remember VX-950 did better than this in a similar trial.

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13. Andy on February 18, 2012 9:46 AM writes...

I thought ribavarin needed to be polymerized in order to work. Does it make sense to combine it with a polymerase inhibitor?

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14. Anonymous BMS Researcher on February 18, 2012 10:03 AM writes...

That NATAP web site is indeed an excellent resource. I work on HIV and HCV myself: my colleagues and I frequently send each other meeting reports from the NATAP site. Virology is an ever-changing scientific challenge because viruses evolve so quickly.

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15. BOB on February 18, 2012 11:31 AM writes...

Bought VRTX last fall, easiest money I have ever made. Betting on reality setting in someday was a no brainer.

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16. BOB on February 18, 2012 11:34 AM writes...

@ 2

I don't think 15% down when you paid ~33% of your market cap for that compound is overly harsh.

If the compound doesn't make it in the end expect to lose the other 18%.

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17. Bunthorne on February 18, 2012 12:50 PM writes...

It's awful nice of Derek to keep us up to date on these developments. But I don't remember him filing one when Gilead was doing well. I'm sure you'll keep us equally well informed when its price comes back up, right?

And BOB, the "reality" is that Incivek was basically DOA. Someone, not necessarily Gilead, or Gilead alone, is going to come out with something that makes Incivek obsolete fast.

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18. BOB on February 18, 2012 2:59 PM writes...

@ Bunthorne

Incivek is DOA? I don't recall seeing that in the last quarterly earnings report.

My brokerage account balance doesn't agree with you either.

To win my bet that VRTX would outperform when priced below 30 a share I didn't need Incivek to be the standard of care for the next decade. I just need the market to realize that the groupthink certainty you say is "reality" may not be so certain.

Nothing is certain in the drug business, 1 clinical candidate in 10 is approved. That's why VRTX was a good contrarian bet under 30 a share. Now they are getting close to fairly priced.

But who knows, the company that gets the next big thing might just be Vertex. They have clearly been doing something right on their own, while everyone else is busy overpaying for someone else's clinical candidate.

If I had owned GILD, I would have sold after that acquisition. If you are going to pay $11B for a drug that has maybe a 20% chance of making $50B and pay for the clinical trials I fail to see how I am going to make any money investing in you. There could be reasonable disagreement about my numbers but I think it's fair to say that the price GILD paid was dangerously high.


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19. Bunthorne on February 18, 2012 3:33 PM writes...

BOB, no doubt Gilead overpaid, and made a reckless gamble. But the way the nuc field looks right now, it's a more a question of who gets there first, since there is likely little to differentiate all the me-too drugs in the class. Vertex (and Merck) deserve a lot of credit for getting the first-generation drugs to the market, but they are just that, first-generation. Something much better is going to come along soon.

Good for you that you made a neat profit on VRTX, but the point of Derek's post was schadenfreude plain and simple. In a month or year, or two years, things are going to be very different, and it's relatively unlikely that VRTX will be at the top of the heap.

This little incident occurred because data was released prematurely and the stock market overreacted. When the other shoe dropped, the market overreacted in the other direction. That's what the market does.

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20. BOB on February 18, 2012 6:55 PM writes...

I don't think it's fair to be critical of Derek here. If you've watched the stock of your company take a tumble for what seems like no good reason it's fair enough to be happy when things swing back the other way.

I just think that the growth through acquisition strategy in pharma is way overdone. It's nice to see a company like VRTX take a drug from start to finish, hopefully more companies will take that model instead of in-licensing the new hot thing. R&D is expensive, but it's also expensive if you overpay for someone else's drug candidate.

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21. Hap on February 18, 2012 11:54 PM writes...

Didn't the people with 1st generation HIV drugs make some nice money on them? There's usually something likely to be better in the pipeline, but something that works will probably still make money in the long run. There's also the thing about birds and bushes - just ask Pfizer about torcetrapib.

Buying other people's drug candidates might work as an R+D replacement, but it is also like to be an easy way to give lots of money to biotechs with anywhere from optimistic to unscrupulous management and to their investment bankers. "Don't believe the hype" is always a good starting point, but the hype is all you're going to get as a potential purchaser. Even if a biotech's management is honest, they may not have enough data (or the incentive or money to get it) to tell you that their candidate is bad. Jumping in with big money to fund the most expensive and riskiest part of drug development does not seem to be an intelligent financial success strategy.

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22. Bunthorne on February 19, 2012 3:46 AM writes...

Well, fair enough. At least we can all agree that the HepC space is going to provide some interesting developments in the years to come, and that some lucky people are going to make a lot of money.

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23. Anon on February 19, 2012 8:04 AM writes...

@20 Bob,
If you look at the first public disclosure of the telaprevir molecule, you will see where it came from. Vrtx does own it, but they pay a small royalty to the company that made it according to SEC filings. Just a slight correction to your post.

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24. BOB on February 19, 2012 9:52 AM writes...

@ Bunthorne

I do agree with you there. But it won't be easy or strait forward and last Friday's hiccup won't be the last. There's always good money out there when someone can make a better drug, but it could easily be 5 years away and Incivek is already on the market making money today.

@ Anon
I did not realize that. I know the MRK drug was licensed, but I thought the VRTX drug was first made in house. Oh well maybe no one takes a drug start to finish anymore.

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25. Calvin on February 19, 2012 2:20 PM writes...

Anon. I have to disagree with you. Lilly paid for the Vertex R&D effort in the early days on HCV protease before pulling out believing that the molecule wouldn't make it (try not to smirk). Composition of matter patents on VX-950 are all Vertex. They pay a royalty to various people, notably J&J because they have outlicenced it to pay for the development costs. But this is a Vertex compounds. The Merck one is from Schering. The Roche one is from Array originally and then onto Intermunne.

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26. Anonymous on February 19, 2012 8:40 PM writes...

@BOB
The MRK drug boceprivir was home grown in the Schering labs. MRK got it in the acquisition (and demolition) of Schering.

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27. PPedroso on February 20, 2012 5:38 AM writes...

We should be paying attention to Miravirsen. If half of what I heard about their first Phase II studies is true, everything else for HepC that is in the market or in the R&D pipelines will just fade out in comparison.

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28. Calvin on February 20, 2012 8:12 AM writes...

PPedroso. Fraid not. Nice result but 2-3 log reduction just isn't enough, not when everything else is gunning for 4-5 log. What the Gilead data demonstrates is that there is no single magic bullet for HCV. Given our experiences with HIV and the fact that HCV replicates like crazy this shouldn't, perhaps, be a huge surprise. It's all about combinations combinations combinations. Miravirsen, will make a very useful and powerful addition to a combination treatment so it's still a great result.

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29. Anonymous on February 20, 2012 9:02 AM writes...

@Calvin,

thanks. I have check a poster on a recent conference and they conclude that miravirsen should be part of the mix and not given alone. Oh well, the primate studies really started me up... :D

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