Second-Line Isn't Second Best (SGP)

Second-Line Isn't Second Best

A drug company's decision to get approved as a first-line treatment for a disease (versus a second-line one) is usually tricky. The first-line market is obviously larger, but usually has more competition. Adding further complexity to the decision, patients who've failed first-line treatments are usually harder to treat.

On the other hand, Schering-Plough's (NYSE: SGP ) move in the European hepatitis C market was really quite easy. It's PEGINTRON and REBETOL combination therapy is already approved as a front-line treatment, and there aren't any drugs approved in Europe to treat cases that have failed other therapies. A market with no competition -- at least on the marketing level -- should work wonders for sales.

The company moved one step closer to its goal on Monday, when the Committee for Medicinal Products for Human Use (CHMP) recommended approval of the combination therapy PEGINTRON and REBETOL for retreating patients. The European Medicines Agency (EMEA) will get the final say on whether the drug is approved for marketing.

PEGINTRON is approved for treating hepatitis C in the U.S., both by itself and in combination with REBETOL as a front-line treatment. Its main competition both in the U.S. and Europe comes from Roche's Pegasys. The second-line treatment approval should set Schering apart -- at least in Europe. There's no word on whether the company will try to get a second-line designation in the U.S.

Schering-Plough needs all the additional sales from second-line treatments it can get. Up-and-coming stars including Vertex Pharmaceuticals' (Nasdaq: VRTX ) telaprevir, with its stellar phase 2 data, and Pharmasset's (Nasdaq: VRUS ) R7128 -- which will be tested in combination with Roche's Pegasys -- might be able to take front-line treatment market share if they're approved.

Best Odds in the Universe!
If you're interested in a 98.79% chance at beating the market... and a 70.84% chance at DOUBLING the market's return – Motley Fool Supernova could be just what you're looking for. And get this: We arrived at these odds from 10,000 random back-tested portfolios composed of Motley Fool Co-founder David Gardner's personal stock picks.

It's why David recently handpicked a small team of world-class portfolio managers. You see, he thinks these odds can get even better! And he'd like to prove it to you...

Simply enter your email address. And the answer to the question everybody is asking will be delivered to your inbox!

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.