Industry observers are comparing the coming battle for hepatitis C drug supremacy to the one of the greatest boxing matches of the 20th century, the “Thrilla in Manila.” In that 1975 slugfest in the Philippines, Joe Frazier and Muhammad Ali traded punishing blows before the match was stopped when Frazier was unable to answer the bell for the 15th round because both eyes had been battered shut.
The pharma battle could be just as compelling. It pits two industry heavyweights: Vertex Pharmaceuticals (Nasdaq:VRTX) and its drug Incivek against mighty Merck (NYSE:MRK) and its Victrelis product. The prize will be the lion’s share of a market that could soon explode to $10 billion, as both competitors gear up efforts to raise awareness of the disease.
Both Incivek and Victrelis were green-lighted by the FDA within days of each other after studies showed they were far more effective than treatments that have been available up to now. They became the first new FDA-approved treatments for the disease in a decade.
Hepatitis C is one of the most important causes of chronic liver disease in the U.S. It is transmitted by intravenous drug use and blood transfusions that infect an estimated 3.2 million Americans. Most don’t even know they have the disease, which is responsible for about 10,000 deaths a year in the U.S. alone.
Vertex recently underwrote a study that argued that it may be cost-effective to screen everyone between the ages of 40 and 64 because nearly 2 million Americans in that age group have hepatitis C but don’t realize it.
Longer term, the best opportunity for both drugs may lie in China, where the infected population is thought to be 10 times that of the U.S. and four times that of developed markets.
Both Vertex and Merck have industry heavyweights in their respective corners. Johnson & Johnson (NYSE:JNJ) has Incivek rights in Europe and hopes to have the drug on the market there by the end of the year. Merck, meanwhile, enlisted the aid of long-standing rival Roche, gaining access to the latter’s large sales force.
So far, oddsmakers differ on the company likely to emerge victorious. Some expect Merck to earn the edge because of the muscle and experience of its large marketing team. Others like it because of Merck’s win-at-all-costs approach that would vindicate a management group that has been under fire and offset its meager record of FDA approvals in the past few years.
Merck also would like to get a nice headstart on a Bristol-Myers Squibb (NYSE:BMY) hepatitis C treatment that should hit the market soon.
Others say Incivek is going to be the big winner. They point to the fact that in testing as many as 79% of previously untreated patients on the drug achieved undetectable viral levels, compared to 49% on the standard regimen. And Vertex ran a trial in sicker patients than Merck, showing that 65% of treatment experience patients could be helped compared to 17% on the standard of care.
In fact, one analyst has already gone out on a limb, making Vertex a prohibitive favorite and predicting that Incivek will capture a dominating 75% of the market.
Our advice to investors? Enjoy this one, folks. It’s going to be a doozy
