Vertex Hep C Drug Emerges From Weekend Looking Stronger: BioBuzz

Merck(MRK), Boehringer Ingelheim, Schering-Plough(SGP) and Johnson & Johnson(JNJ), among others, will present data on competing drugs this week that could raise more concerns that telaprevir's reign will be short lived. But with twice daily dosing a very viable option and cure rates over 80%, telaprevir isn't leaving much room for competing drugs to operate.

Two other data presentation of note from Sunday: Schering-Plough presented a new analysis of an old phase II study demonstrating that its Hep C drug boceprevir can produce a 55% cure rate tough-to-treat "null responder" patients.

These data look strong compared to a 57% cure rate for null responders treated with Vertex's telaprevir in its own phase II study. But it should be noted that Schering-Plough uses a more liberal clinical definition of null response, which allows the company to include patients who aren't as difficult to treat.

Phase II data from an experimental Merck drug MK-7009 were also presented Sunday night. Efficacy was impressive but there were precious few details provided about the vomiting side effect that has raised concerns in the past.

Amgen's Aranesp Might Make for Morose Monday

Amgen's(AMGN) Monday may not be as joyous given the two nasty headlines from Friday. First, the attorney general of New York, among others, filed a lawsuit against Amgen accusing the company of an illegal kickback scheme aimed at boosting sales of its anemia drug Aranesp.

Hours later, a study presented at a medical meeting and published online in the New England Journal of Medicine showed that patients with kidney disease treated with Aranesp to correct anemia were almost twice as likely to suffer from strokes than those treated with a placebo. The study failed to demonstrate that treatment with Aranesp reduced the number of deaths or heart attacks in chronic kidney disease patients compared to placebo treatment. And if that's not enough bad news, Aranesp use was also tied to slightly higher deaths from cancer compared to placebo.

Aranesp sales have declined significantly over the past several years due to safety concerns that has reigned overuse of the drug by doctors in both cancer and kidney disease.

Analysts say chronic kidney disease (non-dialysis) accounted for about $600 million of Aranesp's $3.1 billion in 2008 sales. If there's a silver lining to Friday's bad news, it's that the data from the Aranesp "TREAT" study were largely pre-announced and in-line with investor expectations. Declines in Aranesp sales have been built into many Wall Street models already and most Amgen investors are paying more attention to the company's new bone drug, Prolia.

"While we continue to expect these findings to negatively impact Aranesp use, the study results will remain controversial, as some physicians we spoke with do not anticipate changing prescribing patterns based on these findings. We have already reduced our Aranesp estimates by 9% and 15% in 2010 and 2011, which we think adequately reflects expected sales declines. We believe the spillover in dialysis patients will be limited, as the anemia benefits are greater in this setting," writes Bank of American biotech analyst Rachel McMinn on Monday.

Barclays analyst Jim Birchenough writes, "With heightened scrutiny of excess stroke risk and cancer risk in pre-dialysis patients, Aranesp trends could suffer although overall impact will likely be small. We estimate $600M of $2.6B Aranesp revenues at risk with EPS impact of $0.20, although actual downside risk on potential Aranesp restriction to rescue use would be [less than] $300M and [less than] $0.10 EPS and is already reflected in pre-ASN weakness."

Deutsche Bank analyst Mark Schoenebaum writes, "Net-net, while our US Aranesp erosion is accelerated, risk to 2014 sales number is negligible compared to our previous forecast and equals $290M to consensus forecast. ROW Aranesp erosion was already well-captured by us and consensus; The changes have a minimal impact on our DCF and we are comfortable maintaining our BUY rating at $64 PT."

-- Reported by Adam Feuerstein in Boston

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