Associated Press - February 17, 2012
Gilead Sciences Inc.'s shares plunged Friday after the drugmaker
said a promising hepatitis C treatment it acquired as part of the
$11 billion Pharmasset purchase may need help from other drugs to
effectively treat some patients.
The Foster City, Calif., company said some patients in a small
portion of a midstage study relapsed after completing a treatment
that combined the company's potential drug, labeled GS-7977, and
ribavirin, an older medicine. Gilead executives told analysts
they may have to add additional antiviral drugs to that
combination or extend the length of treatment.
Company shares had climbed 47 percent over the past two months
from around $37 to top $54 as Gilead worked toward completing the
Pharmasset Inc. deal, which it announced in November. But the
stock sank nearly 15 percent, or $8.07, to $46.74 in afternoon
trading while the Nasdaq exchange fell slightly.
Hepatitis C is a virus that can lead to life-threatening liver
damage and is the main cause of liver transplants in the United
States. The disease is spread through the blood, and that can
happen through sharing intravenous drug needles or having sex
with an infected person.
It can take years to manifest, and analysts see hepatitis
treatments as potentially lucrative for drugmakers because they
expect the virus to become a growing health problem as the U.S.
baby boom generation ages.
Analysts see potential in GS-7977, a pill that could become a
preferred option for care if it works without the injectable drug
interferon, which can leave patients with flu-like symptoms that
last for months. Gilead is running several middle- and late-stage
studies of the drug.
In the study discussed Friday, Gilead tested the medicine in
hepatitis C patients with genotype 1, the most prevalent subset
of the disease in the Western world and the hardest to treat. The
patients in this study had already been treated unsuccessfully
Gilead said eight patients had undetectable levels of the virus
in their blood after being treated with the oral
GS-7977-ribavirin combination. But six had a virus relapse in the
month after treatment ended. The other two showed no relapse in
the two weeks after their treatment ended.
WBB Securities analyst Steve Brozak said drugs typically have
unanticipated outcomes like this as they advance through clinical
testing and even after they hit the market. He said Gilead knows
the drug works, but now they need to retool their treatment
"It isn't so much that this happened," he said. "The critical key
is how does Gilead respond to what just happened."
Gilead, known for the HIV drugs Atripla and Truvada, also
acquired some other potential hepatitis treatments in the
Pharmasset deal, which closed last month. Even so, some analysts
see the acquisition as risky, given the price and the fact that
Pharmasset had no products on the market. Gilead agreed to pay
$137 per share in cash for Pharmasset, a stock that had traded as
low as $20.49 in the year before the deal was announced.
GS-7977, which previously went by a different name, was seen as
Pharmasset's most promising treatment.
Summer Street Research analyst Carol Werther said Friday's
announcement was the first disappointing news for a potential
treatment that "looked like the holy grail" in hepatitis C. She
thinks the stock market overreacted.
"The drug isn't dead," she said.