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In the multibillion-dollar race to bring oral hepatitis C treatments to market, Bristol-Myers Squibb (NYSE: BMY ) is leapfrogging Gilead Sciences (NASDAQ: GILD ) and Johnson & Johnson (NYSE: JNJ ) by filing for approval for daclatasvir with Japan's Pharmaceutical and Medical Devices Agency.
The daclatasvir and asunaprevir combo therapy is the first all-oral treatment to be filed for approval, eliminating side-effect-riddled interferon and ribavirin. Bristol's strategic move to go for a Japan launch rather than battle Gilead's sofosbuvir and J&J's simeprevir in the United States is a dramatic shift for the industry and may mark a shift in global drug development toward Japan -- a country in the midst of redefining itself as R&D friendly.
Japan has long been known for launch delay. Stringent approval processes, understaffed agencies, and a pricing scheme that punishes new therapies have all kept drug makers and biotech companies focused on developing drugs in the U.S. and European Union instead.
But, that launch-delay stigma may disappear as Japan embraces a much more R&D friendly stance that includes exemptions for some drugs to its biennial price cuts and the ability to prescribe drugs approved in other countries -- but not yet in Japan -- for the toughest to treat cases.
The pressure to bring innovative drug treatments to Japan more quickly is driven by Japan's rapidly aging population. The country's birthrate has been declining steadily since the 1970s, and 24% of its population is over the age of 65.
That older population, coupled with Japan's wealthy nation status, makes the country very attractive demographically for drug companies. Last year, only the U.S. spent more on drugs than Japan, and Japan represents 10% of the global market.
Japan's hep-C challenge
The market for hepatitis C treatment may not be as big in Japan as it is in the United States, but the number of patients infected still totals some 1.2 million. And 350,000 new hepatitis C cases are diagnosed in Japan each year, far more than the 150,000 in America.
Bristol's focus on Japan is an intriguing shift away from the U.S. and Europe-centric way that most drugs are brought through clinic. The opportunity for daclatasvir to capture share and generate revenue is big, given that as many as 70% of the country's hepatitis C patients are infected with the genotype 1b version of the disease, which has a reputation of being tough to treat.
In Japanese patients, the daclatasvir and asunaprevir combo therapy produced an 84.7% cure rate at 24 weeks -- during phase 3 trials. Those impressive results and the significant unmet need are likely to help speed a decision from Japan's regulatory agency, which is expected to issue a final "yes" or "no" next year.
However, even with the head start in Japan, competitors Gilead, J&J, and AbbVie (NYSE: ABBV ) won't be far behind.
Gilead is currently studying sofosbuvir in a phase 3 trials for Japanese patients. And J&J gained Japanese approval for its simeprevir in September. However, both Gilead's and J&J's first forays are likely to be combination therapies with interferon and/or ribavirin, and that gives Bristol a substantial advantage -- for now.
Both Gilead and J&J have interferon- and ribavirin-free trials ongoing. In Gilead's Lonestar phase 2 study,100% of patients treated with sofosbuvir and ledipasvir were cured in 12 weeks, without the help of ribavirin. In another mid stage phase 2a study called COSMOS, Gilead and J&J teamed up for a non-interferon and ribavirin therapy using a combination of simeprivir and sofosbuvir. That study showed promising results, with SVR8 of 93%.
Bristol, Gilead and J&J are also looking over their shoulders at AbbVie. The company expects to report phase 3 trial data for its hepatitis C treatment later this year. AbbVie also has an interferon- and ribavirin-free phase 2b trial ongoing for genotype 1b patients. In that study, AbbVie is evaluating ABT-450 in combination with ABT-267 in 82 treatment-naive patients.
The Foolish final take
If Bristol's daclatasvir does get the nod, it gives the company a chance to build market share and insulate itself against Gilead's and J&J's more high profile drugs. It also gives it running room ahead of AbbVie. It's unlikely the advantage will last, given that Gilead, J&J and AbbVie all have promising drugs in mid- and late-stage trials. But with a large unmet need, all four of the companies may find they've developed blockbusters.
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