Patrick K. asks: "Can you help me interpret the new Vertex Pharmaceuticals' (VRTX - Get Report) hepatitis C drug data? Will this drug replace Incivek and what does it mean for Gilead Sciences (GILD), Idenix Pharmaceuticals (IDIX) and some of the other companies trying to develop hepatitis C drugs?"
I find it fun to reduce biotech news to musical terms, so when I first saw the new Vertex Hep C data on Monday, my first thought was LL Cool J's seminal rap "Momma Said Knock You Out."
"Don't call it a comeback!"
Vertex is still very much in the Hep C game. The company's experimental drug ALS-2200 (at the highest dose tested) yielded a 4.54 log10 reduction in viral load after seven days of dosing in genoytype 1 hepatitis C patients. ALS-2200 wasn't studied directly against similar Hep C "nucs" in this pilot trial but, naturally, that isn't stopping investors from making their own comparisons. The potency of ALS-2200 stacks up quite well compared to Gilead Sciences' much beloved GS-7977 (4.5 log10 reduction after seven days) and Bristol-Myers Squibb's (BMY) BMS-094 (4.25 log10 reduction after seven days).Oh, wait, did I just mention BMS-094? Silly me. The caveat to all this is that the ALS-2200 results, as promising as they are, only come from eight patients dosed for a week. The blowup of Bristol's nuc in phase II on Wednesday night will place greater scrutiny on the longer-term safety of Vertex's new drug. It's a wee bit early to declare ALS-2200 the next Hep C wonder drug. Gilead has already started phase III studies of '7977 so Vertex is probably 18 months to two years behind. It is worth noting, however, that Vertex enters the coveted Hep C "nuc" club with ALS-2200 by spending far, far less than the $11 billion Gilead spent to buy Pharmasset in order to gain control of '7977. Investors don't seem to care about Gilead overpaying to get into Hep C today but they may care in the future if the treatment pie gets sliced into smaller and less valuable pieces due to a glut of all-oral regimens that all work equally well. As for Incivek, ALS-2200 isn't a replacement drug. It may be complementary if combination studies planned are successful. The problem, however, is that Incivek is not an attractive drug moving forward due to side effects and dosing (two or three times a day). I'd rather see Vertex test ALS-2200 in combination with a more convenient and less toxic protease inhibitor like Johnson & Johnson's (JNJ) TMC435 (co-owned with Medivir.) Vertex also needs to find an NS5a inhibitor that it can combine with ALS-2200. Perhaps Idenix's IDX719 might be a good choice? Matt B. writes: "What are your thoughts on Talon Therapeutics (TLON)? Any more potential for another rally before PDUFA?" I spoke with Talon CEO Steven Deitcher last week. He remains "encouraged and hopeful" that FDA will approve Marqibo on or before Aug. 12 -- the company's PDUFA date. (What else is he going to say, really?) Recall, an FDA advisory panel voted 7-4 to recommend Marqibo's approval as a new treatment for patients with Philadelphia (chromosome) negative acute lymphoblastic leukemia (Ph-ALL) who are no longer responding to current therapies. The panel vote was positive but the margin of victory wasn't tremendous -- some of the experts on the panel seemed unimpressed with Marqibo's 15% response rate but voted "yes" anyway because these PH-ALL patients have no other medical options. That's a reasonable argument for granting approval, so I'll predict FDA does give the green light to Marqibo, although on my 0-10 confidence scale, Marqibo scores a 7. Talon's future starts to look more questionable after Marqibo is approved. Deitcher says there are about 4,000 Ph-ALL patients worldwide, half of those in the U.S. Pricing hasn't been disclosed but I'm guessing $50,000 per course of therapy, which equates to a $100 million market opportunity in the U.S. Talon might deliver $30 million to 40 million in U.S. Marqibo sales on this initial indication, assuming the company can market the drug successfully -- a job it's never done before. The scariest part of the Talon story is its balance sheet. Talon's fully diluted share count is not the 21 million listed on Yahoo Finance. In reality, the company has 140 million shares outstanding when all convertible preferred shares owned by Warburg Pincus and Deerfield Capital are factored in, says Talon CFO Craig Carlson. So, at a share price of $1.10, Talon's true market cap is $154 million, not the $23 million listed in Yahoo Finance. Talon is not a cheap stock. And the share count is headed higher because Talon needs to raise a lot more cash to market Marqibo and pay for the confirmatory phase III study mandated by FDA. That trial is going to cost $42 million, says Deitcher. In our conversation, Deitcher mentioned plans to seek an ex-U.S. partner for Marqibo that could help the company raise additional non-dilutive cash. He also hinted that large pharmaceutical companies might want to acquire Talon outright. Talon as takeover bait? Really? Marqibo is nothing more than a reformulation of vincristine, an old chemotherapy drug -- hard to see it as a highly sought-after product but heck, stranger things have happened. Bill R. has a problem with my column on Amarin (AMRN - Get Report) and the insider sales executed the day after Vascepa's approval. He writes: "I am a follower of your Twitter account and you give good information, but I believe the title of this article does a terrible disservice to your credibility. You know there was no rush to sell. It would be impossible to do this because of SEC regulations. Writing like this is for amateurs and I believe you are of higher standards. I think that causing knee-jerk reactions are wrong. I wish you would have done more research and looked for a more probable reason for the sales.
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