Replies to post #185332 on Biotech Values

[frontiers]

PK makes many of the same points I have on this board. Thanks PK!

In particular, I like this excerpt --

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On the same day that AbbVie-Express Scripts deal was announced, Achillion released data from its HCV pipeline. Whether the data were good enough for Achillion to be competitive was subsequently debated, with most of the commentary focused on whether Achillion’s nucleotide polymerase inhibitor, or “nuc,” ACH-3422, had the same hallmarks of efficacy and safety as Gilead’s and Merck’s nucs. In a phase I trial, Achillion’s nuc took a few days longer than other nucs to knock down comparable amounts of virus, which some interpreted as an inferior outcome. Achillion’s nuc is just one of four HCV drugs that the company has in the clinic that it plans to combine into an effective regimen. Demanding that Achillion’s nuc tie for first place within its drug class fails to acknowledge the lesson from the AbbVie-Express Scripts deal—the bar for getting to the market and competing on price is having a combination regimen that is “good enough.”

Whether Achillion’s regimen is better than Merck’s or Gilead’s is simply not that important. Achieving a 6-week cure is certainly a nice objective and indeed possible, but to get in the game, Achillion just needs to qualify with a regimen that cures most patients in 8 to 12 weeks, a modest goal by comparison that now looks highly probable. With a valuation that is 99 percent lower than Gilead’s, Achillion could exceed expectations by taking even a modest 10 to 15 percent of the market, which is not unreasonable in a 5-player field.

If Achillion does emerge with a regimen that is better than AbbVie’s and Bristol’s, neither of which have a nuc, then these fourth and fifth place players may become unsatisfied with their market share and think about more price cutting to maintain exclusivity in at least one of the few large formularies. This strategy could spark more rounds of discounting by all players, unleashing a potentially unmitigated price war. By acquiring Achillion for its nuc and NS5A inhibitor (another drug used in HCV regimens), either AbbVie or Bristol could both strengthen its own hand and remove one player from the field, at least partially easing competitive pressure. Interestingly, by adding a nuc to its next-generation regimen, AbbVie could dilute the royalty it pays to Enanta Pharmaceuticals (NASDAQ: ENTA) for a protease inhibitor (in the expanded regimen, the protease inhibitor would represent a third of the combination instead of half, unless it were eliminated altogether); reduced payments to Enanta would partially offset the cost of acquiring Achillion.

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[DewDiligence]

Re: Peter Kolchinsky’s write-up wrt RGLS’ RG-101

Regulus could also pursue a response-guided treatment paradigm that, if successful, would have far more impact on established HCV players. In that scenario, all patients would start with a shot of RG101. After 4 weeks, a patient would see their physician again to get a blood draw and a second shot of RG101. The blood draw would be analyzed, and, if the patient’s virus was undetectable (this is called an “RVR4” response), he or she would not need any other treatment. If the patient still had detectable virus, then the physician would prescribe a 4 to 6 week oral regimen, such as Harvoni or Viekira Pak, to ensure a cure.

This scenario is reminiscent of prior regimens in HCV, where patient response after 4 weeks of treatment (i.e., RVR4) with Vertex Pharmaceuticals’s telaprevir (Incivek) or Merck’s boceprevir (Victrelis) determined whether patients received an extra 6 months of treatment. Such a response-guided regimen would be judged by the overall cure rate and not just by the cure rates seen with RG101 alone; as long as the cure rates were similar to the roughly 95 percent of other regimens, it would likely be approved and used. If 40 percent of patients had undetectable levels of virus after 4 weeks of treatment, as was the case in the phase 1 data released in October, then 40 percent of patients would be treated with just RG101 and 60 percent would get the add-on oral therapy for 4 to 6 weeks. That would result in an overall reduction in the number of oral doses of 75 percent for Gilead and 80 percent for AbbVie, with a similar drop in their revenues.

The above has a serious logic error insofar as RVR4 is not a guarantee of SVR12.

[DewDiligence]

ENTA/ABBV/ACHN—Another misleading statement in Peter Kolchinski’s piece (#msg-109535576):

…by adding a nuc to its next-generation regimen, AbbVie could dilute the royalty it pays to Enanta Pharmaceuticals for a protease inhibitor (in the expanded regimen, the protease inhibitor would represent a third of the combination instead of half, unless it were eliminated altogether); reduced payments to Enanta would partially offset the cost of acquiring Achillion.

Although ENTA’s royalty rate would go down if a third drug were added to the ABT-493/ABT-530 (next-gen) regimen, ABBV would not make this change unilaterally—unless its intention were to eliminate ABT-493 entirely. Rather, the addition of a third drug to the regimen is something that would be negotiated with ENTA.

[lgonber]

Agree with the article in ACHN potencial, and adding value to BMY or ABBV un getting better combos ( cheaper and por lower weeks of treatments)
On the other side, I believe RGLS drug will never reach the market. I dont see the subcutaneus injection if by the time there will be a crowded market with oral drugs