Is Gilead Sciences' Dominance in Hepatitis C Unstoppable?

Source: National Cancer Institute. 

Great companies become great for a reason, and for biotech blue-chip company Gilead Sciences (GILD -0.47%), it's primarily been oral hepatitis C therapies Sovaldi and Harvoni.

How Gilead became great
About four years ago, the average cure rate for hepatitis C, a liver disease that can lead to cirrhosis, liver cancer, or even death, was around 50%. Most hepatitis C virus, or HCV, patients had to undergo 24 to 48 weeks of treatment consisting of IV interferon and a ribavirin. Both treatments came with unpleasant possible side effects, such as flu-like symptoms, anemia, and rash.

Source: Gilead Sciences.

Gilead's approval for its once-daily pill Sovaldi in 2013, and Harvoni (a cocktail therapy combining Sovaldi and ledipasvir) in 2014, changed all that. Today, genotype 1 HCV patients, which comprise about 70% of all HCV diagnoses, take a single pill (Harvoni) a day. That's it. Side effects are relatively mild with Sovaldi and Harvoni, and the sustained virologic response rate, or rate at which no detectable level of HCV is found after treatment, rose to 90% of better in nearly all of Sovaldi's and Harvoni's clinical trials.

The success of this combination -- Harvoni for genotype 1, and Sovaldi for other genotypes -- could lead to more than $12 billion in HCV sales for Gilead in 2015. Even with a competing therapy on the market since December 2014 (Viekira Pak), Gilead's HCV drugs continue to dominate.

Gilead raises the bar again
On Monday, Sept. 21, Gilead took one step further in cementing its hepatitis C domination by reporting results from its four late-stage studies (ASTRAL-1, ASTRAL-2, ASTRAL-3, and ASTRAL-4) examining the combination of Sovaldi and velpatasvir, an NS5A inhibitor, as a once-daily cocktail therapy for the treatment of all six HCV genotypes.

That's right, Gilead is working on pan-genotype HCV pill -- and the results were nothing short of incredible.

In total, 1,035 people wound up being treated with the once-daily therapy of Sovaldi/velpatasvir, with 1,015 of them achieving SVR12, the primary endpoint of the study. In plainer terms, just 20 of 1,035 tested patients failed to be completely ridden of the hepatitis C virus following 12 weeks of treatment. Of the 20, seven did not complete the SVR12 visit, so no data could be collected from this cohort, and 12 of the remaining 13 patients relapsed. Amazingly, no patients in the lesser-common genotypes 2, 4, 5, or 6 demonstrated a virologic relapse.

Source: Gilead Sciences.

Now, compare this to the four phase 3 studies reported by Gilead in February 2013 where Sovaldi was administered with a ribavirin (or in some cases also with interferon) as a treatment for HCV. The NEUTRINO study in genotypes 1, 4, 5, and 6 patients led to an SVR12 of 90% in 2013. In the more recent ASTRAL-1 study, genotypes 4, 5, and 6 offered a 100% SVR12. Furthermore, in the February 2013 FISSION, POSITRON, and FUSION trials, SVR12 in genotype 2 or 3 patients given Sovaldi plus a ribavirin ranged from as low as 50% to as high as 78%. In ASTRAL-2 and ASTRAL-3, SVR12 ranged from a low of 80% to as high as 99%.  

The writing is all over the wall: Gilead just upped the bar in treating HCV patients.

Moving forward, Gilead's plan involves filing for a new drug application for its cocktail drug in the U.S. and EU during the fourth quarter. Considering Harvoni's overwhelming success in treating genotype 1 (and its potentially shorter eight-week treatment timeframe for select patients), it's unlikely that Gilead will seek to displace it with this new cocktail. However, Sovaldi/velpatasvir looks to be clearly superior to the Sovaldi plus ribavirin regimen that lesser common genotype patients may be taking, and it would be expected to become the standard of care for genotypes 2 through 6.

This is the only way Gilead can be stopped in HCV
This raises the question: Can anything or any company stop Gilead?

When Sovaldi was approved in 2013, I'd have surmised there were three ways to potentially topple Gilead.

The first method was to beat the company on HCV drug efficacy. Sovaldi's SVR12 rates for lesser common genotypes from 2013 certainly left room for improvement, and another company could have unseated Gilead, at least in lesser common genotypes, as the dominant company in HCV treatments. Based on the release of its latest data, it doesn't look like Gilead is going to be beat in terms of SVR12 anytime soon.

The second way Gilead may have been toppled is by undercutting the high price point associated with Sovaldi and Harvoni. These once-daily pills, which are a major step up in SVR12 and overall patient care vis-a-vis minimal side effects, run $1,000 per day for Sovaldi and $1,125 per day for Harvoni. For a standard 12-week treatment, HCV patients could be staring down an $84,000 or $94,500 cost.

Source: AbbVie.

AbbVie's (ABBV -0.38%) Viekira Pak had minimal success attacking this point with its slightly lower wholesale cost of $83,319 for a 12-week treatment for genotype 1 patients. More importantly, AbbVie forged an exclusive deal with the nation's largest pharmacy-benefits manager, Express Scripts, becoming the PBMs exclusive provider in exchange for substantial discounts. Even though it hurt Gilead's margins, Gilead also followed up with exclusive arrangements of its own. Following a few quarters of Viekira Pak being on the market, it doesn't appear that AbbVie's efforts made much (if any) dent in Gilead's dominance.

Perhaps the only way that Gilead is still susceptible to being challenged is if a drug developer can offer an HCV treatment with similar efficacy but in a shorter time frame. As it stands now, Harvoni can treat some patients in as little as eight weeks. If the standard treatment for patients can be pushed to eight weeks across the board for all genotypes, or even lower, then Gilead could be unseated.

I suspect the company with the best chance to challenge Gilead in treatment length is Achillion Pharmaceuticals (ACHN), which is partnered up with Johnson & Johnson's subsidiary Janssen Pharmaceuticals. Achillion has demonstrated success in six- and eight-week treatments, generating 100% SVRs in a small patient pool. However, based on data reported in April, its six-week success was based on the combination of Achillion's ACH-3102 and, you guessed it, Gilead's Sovaldi.

Although there are no certainties in the biotech sector, it appears as if Gilead's HCV pipeline will remain an incredible cash cow for a number of years to come.