HIV was transformed from a terminal illness into a chronic disease in wealthy countries in the late 1990s, once scientists learned to mix anti-viral drugs into a potent cocktail. That was supposed to hold the virus in check by attacking it from many different angles, keeping it from developing resistance to any one drug.
The same philosophy is now at work in hepatitis C, a chronic viral infection that causes liver damage. After years of polishing in the lab, San Diego-based Anadys Pharmaceuticals (NASDAQ: ANDS) has positioned itself to make one of the key ingredients in what analysts see as a multi-billion dollar market opportunity.
Standard treatments for this disease, known as pegylated interferon alpha and ribavirin, have some drawbacks. They cause nasty flu-like symptoms, need to be taken almost a full year, and only cure a little more than one-third of patients. An estimated 170 million people worldwide have hepatitis C, although most skip medical help because the treatment is considered worse than the disease.
Cambridge, MA-based Vertex Pharmaceuticals hopes to encourage more patients to seek treatment with a protease inhibitor called telaprevir. It’s been shown in clinical trials to almost double the cure rate when combined with standard meds, while cutting the treatment time in half. This is prompting pharmaceutical and biotech companies to pile on, with 40 different hepatitis C drugs in development from three main classes—protease inhibitors, nucleoside polymerase inhibitors, and non-nucleoside polymerase inhibitors. Anadys says it has one of the best contenders in that last category, which it hopes will be a critical ingredient in an HIV-style cocktail that will be the future standard of care.
“This isn’t like statins for cholesterol, where one drug competes with the next,” says Anadys CEO Steve Worland. “This is like HIV, where combining several different classes is what makes them successful.”
Anadys was limping along like a lot of other biotech companies in January, with a stock price of less than $2, until it burst on investors’ radar screens in early January. From the first eight patients in a clinical trial of its ANA-598 drug, Anadys showed it was able to wipe out 99 percent of the hepatitis C virus from the blood (known as a 2.5 logarithmic reduction) within three days. That was at the lowest dose tested in the trial (200 milligrams) and it hopes to do even better at two higher doses, 400 and 800 milligrams.
At the time that data was released, that kind of potency was the best ever seen for a drug in this class, Worland says. The company’s stock more than doubled since the news was released, from $1.91 a share to $5.31 at yesterday’s close. That pegs Anadys’ market value at about $153 million.
Since then, Anadys has been upstaged by a competitor, Laval, Quebec-based ViroChem Pharma, which has developed a drug in the same class that produced an even more potent ability to kill the virus in the first five patients studied—a 3.5 logarithmic reduction. Based on that body of evidence, and the ability to combine this kind of drug with its own proprietary molecule from a different class, Vertex acquired ViroChem earlier this month for about $375 million in cash and stock. Anadys was one of the keen observers of this deal, since it established a fairly hefty price for a hepatitis C drug that’s still in the very early stages of development, Worland says.
What’s fascinating is how few people saw this pattern repeating itself with hepatitis C a few years ago. A little history is in order:
In the early 1990s, the first generation of non-nucleoside polymerase inhibitors for HIV weren’t potent enough to do much good, Worland says. Boehringer Ingelheim’s nevirapine (Viramune) and Pfizer’s delavirdine (Rescriptor) were the first in that class, and because they weren’t potent enough, they allowed the virus to develop resistance, Worland says. “They spoiled the party for non-nucs,” Worland says. “The lack of potency was incorrectly attributed to the whole class. It was guilt-by-association, and so people wrote off non-nucs as a class.”
By September 1998, Bristol-Myers Squibb won FDA approval for efavirenz (Sustiva), and the rest, as they say, is history. By combining Sustiva with other anti-virals, it generated $1.1 billion in worldwide sales in 2008.
What made that drug work while others flopped was its greater potency, Worland says, along with a longer sustained presence in the bloodstream that helps prevent the virus from developing resistance (hence the name, Sustiva.)
The same historical pattern may be repeating itself now with hepatitis C, he says. Japan Tobacco came out with some data several years ago on non-nucleoside drugs that weren’t potent enough, didn’t last long enough in the blood, and allowed the virus to develop resistance, Worland says. That didn’t help Anadys as it was toiling away in the lab on what it considered a better drug. “People got out their broad brush again and said ‘non-nucs aren’t potent, and allow resistance.’ It caused me to tear my hair out,” he says.
The Anadys candidate in this class of non-nucs, ANA-598, is still in its earliest phase of testing. The company expects to provide a more detailed picture of how the drug is performing next month if its data is accepted for presentation at the European Association for the Study of the Liver in Copenhagen, Denmark. The company revealed some of the data from the first eight patients that took the lowest dose, 200 milligrams, and it expects to have more data from those who took 400 milligrams and 800 milligrams.
Anadys is looking to form a partnership with a larger drug maker, although Worland wouldn’t be specific about the kind of terms he’s looking for, or when he hopes to pull the trigger. He says there are “at least 10 major companies” that are actively pursuing hepatitis C, and he notes that many of them don’t have a non-nucleoside drug in their portfolios. Some of these companies will get to see the Anadys data on a confidential basis before it’s expected to be presented publicly in Denmark. Obviously if the value of the drug appears to be increasing, Worland would like to see multiple bidders entering the fray.
Beyond whatever deal Anadys might strike in the next few months, Worland is keeping his eye on a long-term trend: How is hepatitis C being treated, and how can his company fit into that bigger picture.
“If you go into this business because you want to treat diseases, to see that you’re actually able to improve treatment, it’s about as exciting as it gets,” Worland says.
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