About a year ago, while we were still waiting for Viekira Pak from AbbVie to hit pharmacy shelves, many Gilead Sciences (GILD -0.47%) investors were worried the competitor would consume a hefty chunk of the overall hepatitis C market. Fast-forward to the present, and it seems those fears were overblown. Sales of Gilead's hepatitis C franchise -- Harvoni and Sovaldi -- are rolling in at an annualized run rate of $19.2 billion. Third-quarter sales of Viekira Pak suggest an annualized run rate of "just" $1.9 billion.
Image source: Merck & Co.
With Harvoni performing so well despite the entry of Viekira Pak, a combination hepatitis C treatment from Merck & Co. (MRK 0.36%) has elicited a relatively mild response. The FDA has been pouring over data from investigational elbasvir/grazoprevir for a few months now, and a decision is expected in by the end of January.
But should investors be more worried about the treat from Merck? Let's take a look at how Merck's once-daily tablet stacks up to Viekira Pak and Harvoni.
The latest data
On Nov. 6, Merck presented results of a clinical trial evaluating elbasvir and grazoprevir in patients with genotype 1, 4, or 6 who also inject drugs and are on an opioid agonist therapy such as methadone. A stunning 95% of patients treated for 12 weeks with the two drug combo achieved a sustained virologic response -- technical lingo that basically means they're cured.
Impressive cure rates on their own aren't enough to win over physicians, and Viekira Pak's main obstacle is an inferior safety profile as compared to Harvoni. We'll chalk up a few points for Merck's combo in this department. Of the 301 patients evaluated in the study -- of which 21 had cirrhosis and 7% were infected with HIV -- only two reported serious adverse events related to treatment.
Advantage... Merck
Sharing needles is perhaps the most common way hepatitis is transmitted, so it isn't surprising that AbbVie conducted a similar, albeit smaller study. In the phase 2 trial, Viekira Pak cured 37 of 38 patients.
Image source: Merck & Co.
That's impressive, but it's difficult to make an apples-to-apples comparison, here. It's important to bear in mind that in AbbVie's smaller study, none of the patients had cirrhosis or HIV, and all were infected with genotype 1. These patients also took ribavirin -- an antiviral with a host of serious known side effects -- along with the four-drug Viekira Pak combination.
Although AbbVie's multi-pill drug cocktail cured a slightly higher percentage of patients in the smaller study, no physician wants to give patients ribavirin if they can avoid it. After considering the size of Merck's study, and its success in a more challenging patient population with a well-tolerated, two-drug combo, I'm going to call this one in Merck's favor.
Looking further ahead
If approved, Merck's single-tablet combo will probably present a much bigger threat to Harvoni's share of the hepatitis C market than Viekira Pak. Whatever the case, most analysts agree that the next goal is shorter treatment durations effective across genotypes. Type 1 may be the most common, but globally, it represents less than half of all hepatitis C infections. A safe and effective pan-genotypic pill would be especially well received in emerging markets where genotyping patients isn't always an option.
A couple of months back, Gilead announced stunning results with its pan-genotypic combination of investigational NS5A inhibitor, velpatasvir, and sofosbuvir -- the last of which is Sovaldi's active ingredient. In a large phase 3 trial with genotypes 1 through 6, but excluding 3, treatment for 12 weeks led to a 99% cure rate. In a related trial, the same combo cured 95% of genotype 3 patients.
Merck is advancing its own pan-genotypic combination. As usual, making a direct comparison is unrealistic, but we do have some numbers to chew on. In a phase 2 trial, 240 patients were treated with grazoprevir, MK-3682, and either elbasvir or MK-8408.
Image source: Merck & Co.
Cure rates across treatment arms for genotypes 1 and 3 were 98% and 91%, respectively. Among genotype 2 patients, 15 of 16 treated with grazoprevir, the higher dose of MK-3682, and MK-8408 were cured, but other dosing regimens failed to produce an adequate response.
At this stage in their developments, both Merck and Gilead's pan-genotypic combinations appear equally safe. Higher cure rates seen with Gilead's 12-week regimen are a slight advantage, but that's not the only thing working in its favor.
First, the medical community has years of real-world experience with sofosbuvir in Sovaldi and half of Harvoni. That leaves just one unknown entity to deal with: velpatsvir. This is an advantage that will likely keep growing for quite some time. Gilead's pan-genotypic two-drug, single-tablet combo is already in the hands of the FDA, while Merck's potential competitor hasn't entered phase 3 yet.
Gilead investors will want to keep an eye on Merck's 8-week pan-genotypic regimen, and shouldn't let Viekira Pak's unflattering performance in its first quarters on the market lull it into complacency. Merck's emerging hepatitis C franchise is a far more serious threat, but it will be a long time before it's in any position to take down the leader in this space.
