Guilt by Association = 30% Slaughter?

When Bristol-Myers Squibb disclosed that it was suspending dosing of one of its hepatitis C drugs BMS-986094 because of safety issues, I pointed out that investors should be worried about it being a class effect extending into other nucleotide-based hepatitis C drugs.

Apparently, what they needed to be concerned about was the Food and Drug Administration being worried about a class effect. The agency put Idenix Pharmaceuticals' (Nasdaq: IDIX  ) IDX184 on a partial clinical hold and requested additional safety data.

As best I can tell, this is simply guilt by association. There's no evidence that IDX184 has the same cardiac issues that were observed with BMS-986094. Nine patients in an ongoing phase 2b clinical trial reported shortness of breath -- known medically as dyspnea -- but the patients in the trial were also given pegylated interferon and ribavirin, which is known to cause dyspnea. Idenix is planning on giving the patients echocardiograms to check for heart issues.

The problem with clinical holds is that it's usually unclear how long it'll take to convince the FDA that there isn't a problem. Idenix doesn't know exactly what the FDA wants, and even after it gains clarity, there are no guarantees that will be the end of it. Scientific data often land in a gray area and spur further questions rather than definitively answering the original one.

Gilead Sciences' (Nasdaq: GILD  ) GS-7977 is in the same class, but the company has performed enough clinical trials on the drug that the FDA is probably convinced that there isn't a problem. Vertex Pharmaceuticals (Nasdaq: VRTX  ) also has a nucleotide-based drug that's further behind IDX184, but it looked good in early studies. The structures of Gilead's and Vertex's drugs aren't as similar to BMS-986094 as Idenix's molecule, which might give the FDA confidence to let them keep going.

Meanwhile, what's bad for nucleotide-based drugs is good for companies such as Abbott Labs (NYSE: ABT  ) and Achillion Pharmaceuticals (Nasdaq: ACHN  ) that have other hepatitis C compounds in different classes. As long as compounds similar to theirs don't run into safety issues, of course.

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Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Abbott Laboratories. Motley Fool newsletter services have recommended buying shares of Gilead Sciences and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
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