By
Brian Orelli
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December 16, 2011
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The euphoria over Gilead Sciences' (Nasdaq: GILD ) acquisition of Pharmasset (Nasdaq: VRUS ) and Roche's purchase of Anadys Pharmaceuticals seems to have caused memory loss in investors.
But they got a reminder of reality today, when Pharmasset announced it was discontinuing all treatment arms in one of its phase 2b trials that contain the drug PSI-938. The drug candidate caused laboratory abnormalities in tests associated with liver function.
This is nothing new.
Pfizer could be further along in the hepatitis C race if ViroPharma and Wyeth's HCV-796 hadn't died back in 2008, before Pfizer bought Wyeth. HCV-796 suffered from the same potential liver issues as PSI-938. Ditto for InterMune (Nasdaq: ITMN ) and Roche's danoprevir at high doses. Elevated liver enzyme levels are an issue with all drugs, but they're especially problematic for hepatitis C patients, since the virus attacks the liver.
And the list goes on. Boehringer Ingelheim had problems with one of its protease inhibitors. And trials involving Idenix Pharmaceuticals' (Nasdaq: IDIX ) IDX320 were put on clinical hold by the FDA before the company eventually scrapped the compound.
Does the failure of PSI-938 and all the aforementioned compounds mean that Inhibitex (Nasdaq: INHX ) and Idenix -- both down big today -- will also run into safety issues? Absolutely not. Liver toxicity is still a great mystery to drugmakers. If scientists understood what caused liver issues, they could design drugs that didn't cause it. And besides, Merck's (NYSE: MRK ) Victrelis and Vertex Pharmaceuticals' (Nasdaq: VRTX ) Incivek both made it through without major safety issues.
But the failure is a reminder that long-term safety data is still very important to get a drug through the clinical development marathon. Today's drops are justified because the companies were overhyped to begin with. Investors would be well served putting down the acquisition-euphoria Kool-Aid and picking up a history book.
Need help keeping up with the news? Add all the hepatitis C drugmakers to My Watchlist, the Fool's free watchlist service. Or add them individually:
+Trumps+Acquisitions+in+Hep+C&lemoraAdWidth=90&log=1&LogicViewEcap=UserIsNotRegisteredForArticleEcap&referrer=http%3a%2f%2fnone%2f§or=Biotech&segment=default&site=usmf.inv.investing&storytype=Take&TestID=YourMyMom%3a001%2cCLN%3a006%2cnonRegMVT%3a01%2cswapSfrForTrMVT%3a01%2calreadyEcappedTest%3a001%2cprmoCSS%3a01%2cfeaturedArticlesTest%3a01%2cInformTickerCatfish%3a001%2cympCatfish%3a02%2ctickle%3a001&uid=0&url=http%3a%2f%2fwww.fool.com%2finvesting%2fgeneral%2f2011%2f12%2f16%2fsafety-still-trumps-acquisitions-in-hep-c.aspx&usmfClean=DoesNotOwnStockAdvisor&usmfRedirectCriteria=AlwaysTrue&zone=articles)
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