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Bristol-Myers Squibb Outpaces AbbVie in Hepatitis C

By Todd Campbell - May 2, 2015 at 1:03PM

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Bristol-Myers Squibb's hepatitis C sales topped AbbVie's in the first quarter. Is this trend set to continue?

Source: Bristol-Myers Squibb

The quarterly earnings seasons always brings surprises, and this quarter Bristol-Myers Squibb (BMY -1.60%) reported sales for its hepatitis C drugs that may shock some AbbVie (ABBV -0.42%) investors.

In the first quarter, Bristol-Myers reported that it racked up $264 million in sales from its hepatitis C drugs, outpacing AbbVie's highly anticipated Viekira Pak, which posted sales of $231 million in Q1. Here's what you need to know about these drugs as they face off during the remainder of 2015.

Battling over second place
Thanks to Sovaldi, a pan-genotype medicine that offers cure rates north of 90%, and Harvoni, a genotype 1 therapy with mid 90% cure rates, Gilead Sciences (GILD -0.99%) remains the de facto Goliath in hepatitis C treatment.

Gilead Sciences won FDA approval of Sovaldi in December 2013, and its high cure rates, shorter treatment duration, and removal of the need for side-effect laden peg interferon injections for many patients, turned it into a near-instant blockbuster. In 2014, Sovaldi sales totaled $10.3 billion, making it the second-best-selling drug on the planet.

In October, Gilead Sciences strengthened its lead in hepatitis C treatment with the FDA approval of Harvoni, a drug that cuts treatment duration to as little as eight weeks for 40% of patients, offers mid 90% cure rates, and does away with the need for both peg interferon and ribavirin, another drug laden with side effects. Those advantages led to sales of Harvoni topping $2.1 billion in the fourth quarter -- its first on the market.

Since Gilead Sciences' hepatitis C sales eclipsed $12.4 billion in 2014, there's little chance that competing therapies from AbbVie or Bristol-Myers -- both of which are arguably not as good as Gilead Sciences' drugs -- will displace it anytime soon. Instead, Bristol-Myers and AbbVie are angling to be the second seed in this multi-billion dollar indication.

Source: AbbVie

Two different approaches
Bristol-Myers and AbbVie each took a different path in their quest for hepatitis C market share. Bristol-Myers focused its attention abroad, while AbbVie concentrated on the United States.

Bristol-Myers developed its NS5A inhibitor Daklinza and NS3/4A protease inhibitor Sunvepra with an eye on winning approval in Japan, and that strategy allowed it to become the first company to market an all-oral regimen that casts aside peg interferon and ribavirin in that market. 

Japan is the planet's third-largest drug market, and it's home to more than 1.2 million hepatitis C patients, most of which are diagnosed with the genotype 1 variation that Daklinza and Sunvepra are approved to treat. The size of the Japanese market and Bristol-Myers' first mover advantage gave the company an edge over competitors, but Bristol-Myers has also carved out success in Europe.

Despite Gilead Sciences opting out of teaming up with Bristol-Myers to conduct late stage trials evaluating a combination of Daklinza and Sovaldi, Bristol-Myers was still able to win over EU regulators last August after the two drug combo delivered cure rates as high as 100% in trials. 

Overall, approvals in Japan and Europe allowed Bristol-Myers to generate $207 million in sales during the fourth quarter and $264 million in Q1, without the benefit of any U.S. approvals for the indication.

Bristol-Myers' ex-U.S. approach was the opposite of AbbVie's.

Instead of targeting abroad markets, AbbVie's followed the more conventional route and pursued a launch of its drug cocktail Viekira Pak in America.

The FDA gave AbbVie the go-ahead to begin marketing Viekira Pak to U.S. patients in December, igniting a pricing war over hepatitis C drugs that resulted in a steep discounts and an AbbVie exclusivity agreement with Express Scripts, the nation's largest pharmacy benefit manager. In January, AbbVie notched approval for Viekira Pak in Europe, and in April, Viekira Pak was awarded priority review by Japanese regulators.

As a result of the U.S. and European approvals, AbbVie reported first quarter sales of Viekira Pak totaled $231 million. Although that's a respectable launch, it still fell far short of Harvoni's $2.1 billion first quarter.

Looking forward
Gilead Sciences' Harvoni has an easier dosing schedule than Viekira Pak, so Viekira Pak is likely to remain a second tier player to it, but a much more interesting battle will continue to be fought between Bristol-Myers and AbbVie.

Bristol-Myers' Daklinza also has an arguably easier dosing regimen than Viekira Pak, so doctors and patients may lean toward it. Additionally, recently-reported phase 3 trial results studying Daklinza alongside Sovaldi in tough-to-treat hepatitis C patients were impressive, and that could mean that Bristol-Myers is able to differentiate itself.

In post-liver transplant hepatitis C patients, combining Daklinza and Sovaldi achieved a functional cure rate of 94%, and in patients with severe liver scarring the cure rate was a solid 83%. Those results could make Daklinza a key weapon used in certain subsets of hepatitis C patients.

Those findings suggest that while the jury may still be out on who will eventually win the silver in hepatitis C market share, investors shouldn't discount Bristol-Myers potential to out deliver AbbVie in terms of hepatitis C revenue. 

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