Biotech Values

[mcbio]

I took a quick refresher on ACHN and I came away feeling that the unusual design of the of the phase 1 GT1/GT3 study in ACH-2864 is a result of ACH-1625 not working in GT3. IMO their focus was on activity in GT3 when they designed 2864 and they are anxious to prove it.

Yes, I think this is what sets 2684 apart from 1625 though I think ACHN also has confidence that 2684 works in all of the other genotypes as well as a bonus. As you say, the clinic will be where we see if this turns out to be true.

An important question to ask is what will be the backbone in oral HCV therapy by the time ACH-2864 reaches the market. If ACH-2864 is being developed specifically to pair with their NS5A in a DAA combo well hasn't that been tried before? The result there for BMY is the awkward quadruple therapy defaulting back on existing SOC (or Interferon Lamda) to boost the resistance profile of the original two drug combo. A nucleotide analog is needed to be a player in the all oral space. The value of VRUS beyond current treatment is the fact their dual nuke combo (if approved) won't need the help of other classes of drugs for the majority of patients throughout the world to reach a clinical cure. I foresee uses of other classes of drugs in response guided therapy for non-responders, layered on top of PSI-7977/938, just as it's done today with existing SOC. The triple combo/combos will also be used in nulls and will represent a small part of the overall market.

Yes nukes will probably be the backbone of HCV therapy in the future but I'm also not ready to write off PIs and NS5A inhibitors from having a large role either. Those positive expectations for nukes are well priced into the shares of VRUS right now, IMO, at a ~$4B market cap. If there is any kind of safety issue at all at any point with one of the VRUS nukes or even if it's an issue with the BMY NS5A inhibitor in the ongoing combo trial, but it can't be pinned down specifically to BMY's NS5A inhibitor, then VRUS has a long way to fall at current valuation. I'm no longer comfy with the risk-reward given how I think a lot is already priced into the share price. Still a long way to go in the clinic for VRUS. ACHN, by contrast, at just a $400M market cap doesn't have a lot of positive expectations baked into the share price and I do like their longer-term outlook though I still plan to wait for 12-week results on 1625 at the end of this year.