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Bidding for HCV NNRTI ANA598
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*Anadys CEO says in late-stage partnership discussions
*Says thinks its drug is ahead of VCH-222
*Suggests Anadys worth more than ViroChem
By Toni Clarke
BOSTON, March 13 (Reuters) - Anadys Pharmaceuticals Inc said drugmakers are lining up to examine, and potentially acquire, its experimental hepatitis C treatment.
"We're in fairly advanced discussions," said Steve Worland, the company's chief executive, in an interview on Friday. "Five companies have conducted formal due diligence, and we have a couple more scheduled."
Worland said the company is wrapping up an important set of drug data that will be available by the end of March, giving all potential acquirers or licensing partners the opportunity to assess it on a level playing field.
Anadys's lead product, known as ANA598, is a non-nucleoside polymerase inhibitor that the company is preparing for mid-stage, or Phase II, clinical trials.
Many pharmaceutical companies are seeking to develop specifically targeted antiviral therapies for hepatitis C. Vertex Pharmaceuticals Inc is leading the charge with a protease inhibitor known as telaprevir that it hopes will cut current 48-week treatment time for the disease in half.
Earlier this month, Vertex acquired Canadian drugmaker ViroChem Pharma Inc in a deal valued at about $375 million in cash and stock. ViroChem's lead product is a polymerase inhibitor known as VCH-222. It is in the early stages of development.
Protease and polymerase inhibitors block proteins the hepatitis C virus needs to replicate. Many experts believe the two classes of drug can complement each other when combined.
The race is on not only to develop leading drugs in each class, but to be first with a strong combination product.
Worland said the value of the ViroChem deal represents an important benchmark for valuing Anadys, which currently has a market value of $170 million. He declined to place a value on the company but said ANA598 was more advanced than VCH-222 and "it would make logical sense" for Anadys to be more highly valued than ViroChem.
At first glance, however, ViroChem's drug appears to eliminate the virus more effectively than ANA598. Worland said ANA598 eliminated roughly 99.4 percent of the virus within 72 hours while VCH-222 eliminated 99.9 percent of the virus.
"They are both extremely potent and the difference is not necessarily a measure of how they will work in combination," he said.
Vertex believes it will be first to the market with a treatment that combines its protease inhibitor telaprevir with polymerase inhibitor VCH-222 because telaprevir is the most advanced protease inhibitor in development. The company argues that the FDA would be more likely to approve a combination faster if it were familiar with one part of it.
Telaprevir is currently being tested in combination with standard hepatitis C treatments pegylated-interferon and ribavirin.
Anadys argues that the speed of approval for a combination product will depend not on the stage of development of the most advanced part of the combination, but on the "trailing part."
Worland said he believes ANA598 is more advanced than VCH-222, and assuming Anadys partnered with a company having a more advanced drug, its combination would be approved faster than a Vertex combination.
"The Food and Drug Administration has been fairly clear about what they want to see," Worland said. "Both products need to clear certain hurdles and we believe we will clear them before VCH-222."
Worland declined to identify which companies have conducted due diligence, but the list could include the combined Merck & Co Inc and Schering-Plough Corp, whose protease inhibitor boceprevir is slightly behind telaprevir in development; and Johnson & Johnson, which has rights to telaprevir outside the United States and Japan. J&J has a second-generation protease inhibitor in development.
Roche Holding AG is also a big player in hepatitis C. Other interested companies could include Pfizer Inc, Gilead Sciences Inc and Bristol-Myers Squibb Co.
Anadys closed 2008 with $27.9 million in cash and expects to end the first quarter of this year with $20 million.
In afternoon trading, Anadys shares were off 38 cents or 6.4 percent to $5.60 on Nasdaq. (Reporting by Toni Clarke, editing by Gerald E. McCormick)
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