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Pharmasset's PSI938 Discontinued; Impact on Other Nukes in Hepatitis C?
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Wm Blair & Co Analyst Equity Research Report
Y. Katherine Xu
"Currently, the only nukes that have met this important criterion are PSI-7977 and mericitabine from Roche (RHHBY $42.15). PSI-7977 has been dosed for 12 weeks or longer in over 400 patients resulting in no safety signals, and this, together with the high potency and the first-in-class status, led to Gilead's $11 billion offer. Mericitabine also passed the challenge and Roche recently announced the initiation of the Phase II DYNAMO study, which will evaluate mericitabine+Victrelis+P/R, in addition to the INFORM and MATTERHORN studies that evaluate the mericitabine+danoprevir combo with or without P or R. Today's announcement means that PSI-938 may not pass the bar. Next we need to see whether INX-189 of Inhibitex and IDX184 of Idenix pass the 12-week safety bar. If they accomplish this feat, there will be a significant valuation inflection for both drugs."
Friday morning, Pharmasset announced that it would amend the ongoing Phase IIb QUANTUM study by discontinuing all treatment arms containing PSI938; abnormal liver function tests were observed in hepatitis C virus (HCV) patients receiving 300 mg oncedaily dosing (QD) of PSI938. There are 235 patients who received PSI-938 monotherapy or PSI-7977+PSI-938 in the QUANTUM study, and the liver signal was ascribed to PSI-938. The company did not disclose when the onset of the liver signals occurred or details on the liver function tests (ALT, AST, or bilirubin), but we note that previously PSI-938 appeared safe in the 14-day NUCLEAR study, although patient numbers were small. Pharmasset commented that no laboratory abnormalities have been observed in patients receiving PSI-7977 plus ribavirin (R). Only three arms in QUANTUM will continue: PSI-7977+R for 12 weeks, PSI-7977+R for 24 weeks, and placebo. We illustrate the Phase IIb QUANTUM study in figure 1, on page 3.
No death sentence yet on PSI938. Pharmasset commented that as QUANTUM enrolled very quickly, the liver signal was detected in boluses of patients, which made it difficult to dissect details within a short time. The company made the decision to discontinue all PSI-938-containing arms within the last 24 hours to protect the PSI-7977+R arms; if more severe PSI-938 safety signals come up during the holidays, the FDA could shut down the whole QUANTUM study, which would impede the progress of the key candidate. Pharmasset intends to re-start studies on PSI-938 at lower doses to evaluate its safety as well its utility in the combination setting with PSI-7977, in particular, whether PSI-938 could eventually replace R.
PSI7977 stays intact; PSI7977+R up for testing in GT 1 patients with data out late first quarter 2012. To date, over 400 patients have been exposed to PSI-7977 for 12 weeks or longer, and no notable safety signals have been identified. The goal of the QUANTUM study is to test whether the PSI-7977+R regimen for 12 weeks could also achieve the same near-100% SVR in genotype 1 (GT 1) patients as it did in GT 2/3 patients, and if 12 weeks of PSI-7977+R treatment is not sufficient, whether 24 weeks will be. The SVR data will be available during late first quarter or early second quarter 2012, by our estimation. We believe this will be the decisive data for Gilead and Pharmasset to have a pan-genotypic, all-oral regimen in hand to take into full blown Phase III studies.
No impact on Gilead acquisition of Pharmasset; deal on target to close first quarter 2012. Both Pharmasset and Gilead (GILD $37.16; Outperform) have commented that today's announcement did not trigger the "key product event" clause within the agreement announced on November 21, and both parties' rights and obligations remain intact. Gilead stated that the value of the Pharmasset transaction is based on the potential future cash flow from PSI-7977 along with its own HCV portfolio.
All HCV drugs must pass the 12week safety bar. The treatment duration for oral HCV compounds is likely to be 12 weeks or 24 weeks. Therefore, all new drug candidates must pass the 12-week safety bar. Currently, the only nukes that have met this important criterion are PSI-7977 and mericitabine from Roche (RHHBY $42.15). PSI-7977 has been dosed for 12 weeks or longer in over 400 patients resulting in no safety signals, and this, together with the high potency and the first-in-class status, led to Gilead's $11 billion offer. Mericitabine also passed the challenge and Roche recently announced the initiation of the Phase II DYNAMO study, which will evaluate mericitabine+Victrelis+P/R, in addition to the INFORM and MATTERHORN studies that evaluate the mericitabine+danoprevir combo with or without P or R. Today's announcement means that PSI-938
may not pass the bar. Next we need to see whether INX-189 of Inhibitex and IDX184 of Idenix pass the 12-week safety bar. If they accomplish this feat, there will be a significant valuation inflection for both drugs.
What is the read through to Inhibitex and Idenix? PSI-938, INX-189, and IDX184 share the same basic nucleotide, guanosine, but have different modifications on the sugar moiety and very different pro-drug designs. We do not believe the liver signal observed with PSI-938 would necessarily manifest in INX-189 or IDX184 studies; this is likely not a guanosine nucleotide class issue. We believe that the total package of the molecule dictates its efficacy and safety profile; eventually all these drugs need to be studied in humans, and the ones that show adequate 12-week safety in humans will prevail, despite what the in vitro or preclinical studies might suggest.
For example, PSI-938 in vitro was very clean, but liver toxicity came up in humans. The same happened to the Idenix protease inhibitor IDX320. Mericitabine, on the other hand, demonstrated kidney toxicity in monkeys, but was able to pass the 12-week safety bar in humans.
Our conversation with Idenix management suggests to us that to date, a few of the first cohort of 30 patients on IDX184+P/R have reached the 12-week mark and so far no safety signals were observed that are atypical of what is routinely observed with P/R alone. Patients with abnormal liver enzymes have normalized, and patients with normal liver enzymes at baseline have stayed stable.
Our conversation with Inhibitex management suggests to us that to date, a few of the patients on INX-189+P/R have reached the 12-week mark and a few more have passed the 10-week mark. So far, no treatment interruptions occurred and liver enzymes are coming down as well.
We realize that these are very small numbers of patients, and some rare adverse events might start to manifest only when the drug is studied in hundreds of patients. However, liver enzyme levels, hematological parameters, and GI side effects, which are the "usual" potential side effects observed with nukes, usually show up during the first 12 weeks and occur at a relatively high frequency. The fact that neither Idenix nor Inhibitex observed strong safety signals to date is encouraging, in our opinion.
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