When it comes to treating hepatitis C, there's no bigger player than Gilead Sciences (NASDAQ: GILD). Thanks to recent launches of its pan-genotype HCV drug Sovaldi and its genotype 1 therapy Harvoni, Gilead Sciences is dominating the indication, with combined sales of $12.4 billion last year. But could Gilead Sciences' market share end up being threatened by a small upstart? Perhaps. Achillion Pharmaceuticals (ACHN +0.00%) is working on next-generation HCV medicines that could shrink treatment duration and eventually cut into Gilead Sciences' sales.
First some background
Gilead Sciences' hepatitis C success stems from its $11.2 billion acquisition of Pharmasset in 2012. That deal gave Gilead Sciences a deep bench of hepatitis C research that included Sovaldi and led to Harvoni, which is a combination of Sovaldi and Gilead Sciences' NS5A inhibitor ledipasvir.
The resulting launch of Sovaldi and Harvoni absolutely revolutionized patient treatment.
In the past, HCV patients were treated with a side effect-laden cocktail including peginterferon and ribavirin. Patients had to take those injection-based drugs for 48 weeks, and, sadly, the couplet delivered just coin-flip cure rates. Due to side effects, roughly a quarter of all patients discontinued this therapy prior to completion.
Since hepatitis C affects 150 million people or more worldwide and the disease can result in life-threatening liver failure, it's little wonder that drugmakers like Gilead Sciences were eager to deliver a better alternative.
Sovaldi, which won FDA approval in December 2013, is an oral treatment that can be taken once daily for 12 weeks. It delivers cure rates north of 90% and in many cases removes the need to take peginterferon simultaneously. Harvoni won approval for use in genotype 1 patients -- the most common variation of the disease -- in October 2014. Like Sovaldi, it's taken once-daily; however, roughly 45% of patients can take the drug for just eight weeks, rather than 12 weeks, and Harvoni removes the need for both peginterferon and ribavirin -- a big improvement for patients.
In the wings
The sheer size of the patient population has prompted other drugmakers to develop therapies that they hope can trump Sovaldi and Harvoni. Achillion Pharmaceuticals' clinical stage pipeline is among the more intriguing of these potential competitors.
Achillion Pharmaceuticals' most advanced hepatitis C drug is ACH-3102, which is in phase 2 trials to evaluate its safety and dosing regimen. So far, results from its trials are impressive.
Last fall, the company reported that 100% of HCV patients in a small trial were functionally cured of the disease after taking a combination of Sovaldi and ACH-3102 for eight weeks. In February, the company also reported that the Sovaldi-plus-ACH-3102 couplet cured 100% of patients after just six weeks of therapy. Currently, the company is studying a four-week trial of the combination, which, if successful, would mark a halving of Harvoni's shortest treatment regimen.
The success of ACH-3102 suggests that it could be a better drug than ledipasvir, and that opens up the potential for ACH-3102 to be paired up with other Sovaldi alternatives. Achillion Pharmaceuticals hopes that its own in-house option, ACH-3422, can prove to be just as potent as Sovaldi, and if it is, that it can achieve similar short-duration cure rates when paired up with ACH-3102.
Research is ongoing into Achillion Pharmaceuticals' home-grown HCV therapy, so investors will have to wait until later this year to see if it delivers similar cure rates. If it does, it could potentially threaten Gilead Sciences' dominance.
Looking ahead
Although Achillion Pharmaceuticals' mash-up is intriguing and could eventually dent Gilead Sciences' market share, investors should recognize that it could be years before an Achillion Pharmaceuticals-based therapy reaches the market -- if it ever does.
So far, Achillion Pharmaceuticals' ACH-3102 studies involve only a dozen patients, and that's far too few patients to draw a definitive conclusion on the drug's efficacy. Also, there's little data (yet) suggesting that ACH-3422 will prove to deliver cure rates equivalent to Sovaldi's. Finally, investors should also remember that Gilead Sciences isn't going to yield its market share easily. Gilead Sciences is developing its own next generation HCV therapies that could end up relegating Achillion Pharmaceuticals to a bit player, or worse. For that reason, I'd say Gilead Sciences' market share isn't at risk anytime soon, and Achillion Pharmaceuticals remains a pretty risky bet.
