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>>> Can Anyone Challenge Pfizer's Covid Dominance? Why These Biotechs Say Yes


Investor's Business Daily

ALLISON GATLIN

02/11/2022


https://www.investors.com/news/technology/biotech-stocks-nip-at-pfizer-heels-with-their-next-generation-antivirals/?src=A00220


Drug behemoth Pfizer (PFE) was the first to launch a pill designed to treat those who have contracted Covid — but a pack of small biotech stocks are already nipping at its heels.

These relatively tiny firms have a combined market cap of roughly $2 billion, less than 1% the size of Pfizer today. But the companies, with names like Enanta Pharmaceuticals (ENTA), Aligos Therapeutics (ALGS) and Atea Pharmaceuticals (AVIR), say they're taking a page out of the playbook for other viral diseases.

Covid treatments, known as antivirals, first are optimized for effectiveness and safety. Later, companies will make them more convenient, Aligos Chief Executive Lawrence Blatt told Investor's Business Daily. The same process has occurred in HIV, hepatitis C, hepatitis B and influenza.

"If you look at HIV, HCV, HBV, influenza — the first drugs on the market are never the ones with the longest product life cycle," Blatt said. "It's really the later ones that optimized those three aspects. And we believe our drug optimizes those aspects."

SVB Leerink analyst Roanna Ruiz says the next six months to a year will be key for these biotech stocks to prove their antiviral worth. Already, Pfizer is guiding to $22 billion in full-year sales of its antiviral, Paxlovid. And that's just based on contracts signed as of late January.

Biotech Stocks: Antivirals In Testing

To understand the biotech stocks' argument, it's important to know how Pfizer's Paxlovid and Merck's (MRK) molnupiravir work. Molnupiravir was the second Covid antiviral to gain emergency authorization in the U.S.

The Paxlovid regimen involves taking two pills. One blocks an enzyme called a protease. The virus needs the protease to replicate. The second drug is called ritonavir. Ritonavir is often used in HIV treatment to boost the activity of a protease inhibitor by slowing how fast a person's body metabolizes the first medicine.

In clinical testing, Pfizer's regimen reduced the risk of hospitalization by 89% in unvaccinated people at a high risk of developing severe Covid. Patients started treatment within three days of symptoms appearing. In people with a standard risk, Paxlovid reduced the same risk by 70%.

The mechanism is different from Merck's Ridgeback Biotherapeutics-partnered molnupiravir. Molnupiravir works by introducing errors into the RNA of the virus. This eventually renders the virus incapable of replicating. In its test, molnupiravir reduced the risk of hospitalization and death by 30%.

Both companies are bullish on their prospects. Pfizer expects Paxlovid to generate 22% of its sales this year. Merck sees molnupiravir making a roughly 10% contribution to sales. But the regimens have their own risks. They also require patients to take several dozen pills over the course of three to five days.

This is where smaller biotech stocks hope to sneak in with next-generation pills.

Safety Is A Priority

Paxlovid and molnupiravir both have some safety considerations.

Because of the way it works, molnupiravir could theoretically cause cancer or implant genetic mistakes in the unborn children of pregnant patients. And Paxlovid's boosting agent doesn't discriminate. It boosts the activity of Paxlovid's antiviral — and most other drugs patients take.

Eliminating the need for ritonavir boosting could allow a new protease inhibitor to take hold, Leerink's Ruiz said. Before prescribing Paxlovid, physicians must determine which medicines a patient absolutely needs. Unintentionally boosting a statin, for instance, could have serious complications.

"You could boost some drugs to dangerous levels," Enanta CEO Jay Luly told IBD. "I think a lot of the average physicians who are going to be writing these scripts don't have the time or don't have the capacity to be working through all these decisions on a patient management basis."

Inhibitors That Don't Need Boosting

Luly says Enanta's team of virologists created potent protease inhibitors that don't need boosting. The company is planning to begin testing its antiviral in healthy volunteers later this month. If successful in healthy people, it will test the drug in Covid patients in the second half of the year.

Aligos changed the chemistry of its antiviral. Theoretically, the liver will metabolize the drug slowly, eliminating the need for ritonavir. Chief Executive Blatt also contends the drug is 10 times more potent than Pfizer's Paxlovid.

Still, the company needs to prove its claims. Aligos hopes to begin human testing in the fourth quarter. Another player in this realm, Pardes Biosciences (PRDS), is a bit ahead of both Aligos and Enanta. It's already testing its drug in healthy people.

All three biotech stocks have been under pressure this year, amid a broader biotech fallout.

Combinations Also Considered

Removing ritonavir from the cocktail also lowers the number of pills patients must take. Leerink's Ruiz estimates Paxlovid and molnupiravir patients take 30-40 pills over the course of three to five days.

It would also make other combinations easier to test.

Atea Pharmaceuticals, another small biotech stock, is angling for a combined approach to Covid. It has a nucleotide in testing, similar to Gilead Sciences' (GILD) fully approved Covid treatment, Veklury. Nucleotides work by disrupting viral replication.

Previously, Atea was working with Roche (RHHBY) on its Covid approach. The duo ended their collaboration in November after the antiviral failed to meet its goal in a Phase 2 test. Biotech stock Atea slumped nearly 66% that day.

Now, CEO Jean-Pierre Sommadossi says Atea will focus on pairing its nucleotide with a protease inhibitor. He believes Atea's oral drug has a step up on Gilead's, which is given intravenously. The company is planning to begin testing a combination in the second half of the year.

Antibody treatments from Regeneron Pharmaceuticals (REGN) and Eli Lilly (LLY) use a similar tactic. The idea is if one antibody fails, the other will act as a backup. That method didn't pan out with omicron, however, and the companies now are working on next-generation drugs.

So far, Paxlovid and molnupiravir stand up to omicron. But a mutation in the protease targeted by the inhibitors from Pfizer and trailing biotech stocks could be damaging, Atea's Sommadossi says. Enanta and Aligos say their protease inhibitors have tackled every variant in preclinical testing.

Biotech Stocks Eye Their Market

Meanwhile, it's hard to pinpoint the long-term market for Covid antivirals.

Today, Covid impacts nearly everyone in the world. Even vaccinated individuals are contracting Covid — though their cases tend to be less serious. Most say Covid will eventually become endemic, like the flu. It might already be endemic, in fact. Experts don't agree on whether it's there yet.

Fully reopening all businesses without restrictions will require multiple antivirals, Enanta's Luly said.

"Vaccines are never 100% in these kinds of settings and compliance isn't 100%," Enanta CEO Luly said, noting a return to normalcy will require several antivirals.

Luly contends these drugs will give people confidence to manage their sickness if they do contract Covid. Further, the likely endemic nature of Covid gives biotech stocks with antivirals a long tailwind.

"I read an analyst note today thinking Pfizer could get up to $30 billion on Paxlovid sales this year," Luly said. "That's a testament to the scope and scale of this whole pandemic."

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