Replies to post #90746 on Biotech Values

[oc631]

I am aware of the lower dosing, and I'm not accusing Welch of misleading investors, but I'm starting to see a negative trend in development. The fact that 7227 needs ritonavir boosting should raise a red flag. Will it still meet the definition of a DAA when boosted with ritonavir in combination with RG7128? It seems Roche will wait for safety results in 7227 with SOC before pushing forward in Inform-3. I think Pharmasset's release stating Roche is evaluating the potential of RG7128 with other stat-c compounds shows who the weak partner is.

[DewDiligence]

I think ITMN-191 (a/k/a/ RG7227) is likely dead for all practical purposes. There are enough HCV PI’s in development that it just doesn’t make sense for Roche to invest a lot of money in one whose safety profile is questionable. Ritonavir boosting is not the answer, IMO.

For Roche, dropping the program where ITMN-191 was being added to the SoC ought to be a relatively easy decision. The all-oral INFORM-n program is tricky, however: under the terms of the ITMN-191 license, Roche has financial obligations to ITMN if Roche develops any HCV PI, even if ITMN had nothing to do with it. Thus, Roche may try to combine RG7128 (the nuke from VRUS) with an oral drug from a non-PI class, which incurs no obligations to ITMN.

There are several clues that Roche no longer thinks ITMN-191 has great promise:

• Cancellation of the INFORM-2 trial. Although the purported reason for cancellation is that the INFORM-2 trial duration (4 weeks) was too short, this explanation does not pass the smell test, IMO. If duration were the real issue, Roche could simply have increased the duration of INFORM-2, and it’s doubtful that regulators would have complained. Inasmuch as Roche had planned to run a 24-week phase-2b study of SoC ± unboosted ITMN-191 before the liver tox reared its head, and Roche has already started a 24-week trial of RG7128 ± SoC (#msg-46762882), clearly Roche has completed enough preclinical tox to have extended INFORM-2 well beyond 4 weeks if it had wanted to.

• The waffling language in ITMN’s PR about plans for the phase-2b study testing SoC ± ritonavir-boosted ITMN-191 (http://finance.yahoo.com/news/InterMune-Reports-Fourth-prnews-3174885452.html?x=0 ):

InterMune and Roche today reported that the next step in the INFORM direct antiviral agent (DAA) program is planned to be a study combining RG7128 with ritonavir-boosted RG7227 involving treatment durations of at least 12 weeks and evaluating sustained virologic response (SVR). The ritonavir-boosted DAA study to evaluate SVR may begin in the second half of 2010; the exact timing will be based on emerging data from the on-going studies.

The word may is damning in this context. Roche is telling us that the phase-2b study will likely never be conducted.

• VRUS’ disclosure that Roche wants to test RG7128 with agents other than ITMN-191 (#msg-46762882).

Based on only the first two bullets above, I would have said that the probability of ITMN-191’s being dead was 80%, but the third bullet is the clincher, IMO. I’ll be surprised if ITMN-191 ever makes it to phase-3.