Costa Mesa drug maker Valeant Pharmaceuticals International plans to forge ahead with development of a key hepatitis C treatment, even after a critical clinical trial came up short and an analyst said the “drug is dead.”
“We will continue to move toward registration of the drug and launch in late 2007,” Chief Executive Timothy Tyson said on a conference call with investors and analysts to discuss late-stage clinical trial results for Viramidine.
Valeant said last week that trials showed that Viramidine was safer than the standard treatment for the liver disease. The kicker: It was found to be less effective at treating hepatitis C.
The results are a blow for Valeant, which has pinned high hopes on Viramidine to supplant its fading flagship ribavirin, the standard treatment for hepatitis C.
Wall Street’s take? Investors smacked Valeant’s shares down 14% on the news. Valeant had a market value of $1.4 billion at a recent check.
At least one analyst continues to believe that Valeant needs to snuff out Viramidine and move on.
Andrew McDonald of ThinkEquity Partners LLC said in a report that only 38% of the patients who received Viramidine achieved sustained virologic response, compared to 52% of the patients who were in the control group that received ribavirin.
Sustained virologic response means the hepatitis C virus can’t be seen in a patient’s blood six months or more after completing therapy.
“In our opinion, this is a failure and the drug is dead,” said McDonald, a longtime critic of Valeant’s Viramidine effort because of its development costs.
McDonald took a dim view of Valeant’s plans to continue working on Viramidine, writing that Valeant is “throwing good money after bad” by continuing research and development efforts.
“We think this is a poor strategy,” Mc-Donald said.
Gregory Gilbert, an analyst with Merrill Lynch & Co., was slightly more cautious.
“While the company remains confident that Viramidine is an approvable drug, until we get more information we are taking a more conservative stance on Viramidine’s potential,” Gilbert wrote.
Gilbert downgraded his rating on Valeant shares to “neutral” from “buy.”
Combo Treatment
Valeant tested Viramidine with pegylated interferon, a protein that is believed to cause a better response to treatment. A combination of ribavirin and pegylated interferon currently is the main treatment for hepatitis C.
Coming up with a new drug to treat hepatitis C is critical for Valeant.
Sales of ribavirin are down amid competition from generic drug makers. The ribavirin combination treatment also carries side effects that Valeant was hoping to avoid with Viramidine.
Valeant said the trial results were hurt by the use of lower dosages of the drug and other statistically inconsistent results.
Patients who received a higher dose of Viramidine had a better response, Valeant said.
Valeant Chief Scientific Officer Kim Lamon said on the conference call that the company believes the data shows that dosing of Viramidine could be increased while “maintaining our superior safety advantage.” Lamon also pointed out that Viramidine, like ribavirin, should be given in relation to a patient’s weight.
Tyson said that analyses of the Viramidine dosage and safety results “are very encouraging” and provide Valeant enough information to show the drug “demonstrates super safety and meaningful clinical efficacy.”
Second Trial
Valeant now plans to conduct a second late-stage clinical trial on Viramidine.
Viramidine isn’t Valeant’s only hepatitis C candidate.
Earlier this year, the drug maker wrapped up a $113.5 million buy of Infergen, another hepatitis C drug, from the Bay area’s InterMune Inc.
Thousand Oaks-based Amgen Inc. originally developed Infergen, which has shown promise in some patients but isn’t widely used.
Earlier this year, Richard Watson, an analyst for William Blair & Co. in Chicago, said he didn’t think it was likely that Valeant was looking at Infergen as a backup for Viramidine.
But Watson said, “That could be the net result if (Viramidine) does fail,they have another way of getting into the market.”
