For This Stock, 2 Drugs Are Better Than 1

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It's likely going to take a cocktail of drugs to fight hepatitis C, but you need only one from each class of drugs. Attacking the virus from multiple angles is the way to go.

So it's a good thing that Vertex Pharmaceuticals (Nasdaq: VRTX  ) licensed two hepatitis C drugs from Alios BioPharma, because only one of them made it past the critical phase 1 clinical trial. Vertex is dropping development of ALS-2158 after it failed to produce enough antiviral activity to justify taking it further into the clinic.

The other drug that Vertex got in the deal, ALS-2200, which it's calling VX-135, looks much better. We already saw solid data from a phase 1 trial by itself, and yesterday Vertex followed that up with data from patients that took ALS-2200 with ribavirin, a generic antiviral drug. The median reduction in virus levels for the combination therapy wasn't quite as good as the group that got ALS-2200 alone, but the percent of patients reaching undetectable levels was slightly higher.

Of course, were talking about only eight patients. It's going to take a phase 2 and eventually a phase 3 trial to confirm that ALS-2200 works. Vertex plans to evaluate ALS-2200 in two phase 2 trials. One trial will combine it with ribavirin. And the other trial will combine ALS-2200 with Incivek, Vertex's approved hepatitis C.

ALS-2200 and ALS-2158 are nucs, which work by stopping the virus from replicating. The class was turned on its head last month when Bristol-Myers Squibb (NYSE: BMY  ) stopped development of BMS-986094 because of safety issues. The FDA also put a pair of drugs from Idenix Pharmaceuticals (Nasdaq: IDIX  ) on hold because they're related to Bristol's compounds. ALS-2200 appears to be different enough that the FDA isn't worried about its safety. I think Idenix's drugs eventually get off the hold, but the delay will help Vertex catch up.

It's unlikely ALS-2200 will be the first nuc on the market, though. Gilead Sciences (Nasdaq: GILD  ) already has its nuc, GS-7977, in four phase 3 trials, which, if positive, would put the drug ready for FDA submission by the middle of next year.

Being second to market isn't ideal, but it might not be so bad if ALS-2200 has some safety, efficacy, or dosing advantage over GS-79777. We'll have to wait for the phase 2 data to see if that's the case.

While second to market might not be that bad for Vertex, you certainly don't want to waste a second before checking out this energy stock. Fool analysts expect natural gas prices to rebound before 2014. The reasons are laid out in the Fool's new free report "The One Energy Stock You Must Own Before 2014." Click here now to get your copy for free.

Fool contributor Brian Orelli holds no position in any company mentioned. Check out his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Gilead Sciences and Vertex Pharmaceuticals. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

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