Replies to post #75449 on Biotech Values

[DewDiligence]

Re: VRUS Citi webcast

You highlighted the salient points from the webcast. Here are my own thoughts:

HCV nukes have the potential to be less prone to resistance compared to non-nukes and PIs. Schaefer Price, VRUS' president, was quick to point out his bias, given that VRUS' entire HCV focus is on the nuke space.

The notion that one or more nukes will form the backbone of HCV combination therapy is based on the immense success this approach has had in the HCV arena (e.g. GILD’s Truvada is a combination of two nukes). Thus, I don’t think Price’s comment in this regard was unduly biased by the fact that VRUS owns the most advanced HCV nuke.

Price made the point I've heard you make before in that it is safety that is more important in a given HCV compound, even more so than efficacy. Efficacy of any given compound should not be a major issue given that HCV treatment will consist of multiple direct-acting antivirals.

That’s right—almost any combination of direct antivirals from multiple classes will do a good job of stopping HCV viral replication. The key to a medically and commercially successful regimen is thus safety, tolerability, and complementary barriers to resistance by the cocktail components.

I wonder if VRUS deserves some type of premium given that they clearly appear to be furthest along in the HCV nuke space. VRTX enjoys a rich market cap ($4.5 billion) based in large part to being furthest along in the HCV space in general with its PI. But what about VRUS? They're furthest along in the nuke space, but at a roughly $275 million market cap today, I'd argue that they're not being afforded much premium.

By and large, investors don’t yet seem to understand that a great HCV cocktail need not consist of component drugs that are individually great when used with interferon and ribavirin.

I realize [R7128] may or may not be best-in-class in the nuke space, but you'd think they would enjoy some type of premium for being furthest along. To date, I believe the safety has been clean and potency good.

R7128 did show kidney tox in monkeys, so it’s not out of the woods yet on safety. The phase-2 R7128+SoC trial includes a preliminary mini-trial in which a few patients in each trial arm are checked for kidney abnormalities before the main portion of the trial can be fully enrolled.

]Perhaps the biggest concern is that VRUS' nuke will likely be dosed twice daily and follow-on competitors may offer a once-daily nuke.

I don’t think this is a major drawback insofar as HCV PI’s are predominantly BID drugs and the dosing schedule of the most-frequently dosed drug in the cocktail is, for all practical purposes, the dosing schedule of the cocktail itself. A bigger issue with R7128 than the BID dosing is the very large 2,000mg/day daily load needed for efficacy, which may preclude R7128 from being co-formulated into an Atripla-like, all-in-one pill.

[DewDiligence]

VRUS addendum: If you're considering taking a position, don't forget to ascribe some value to Clevudine. Please don't ask how much!