February 10, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
Biotech darling Gilead Sciences, Inc. could do, or say, no wrong during its presentation at the annual BIO CEO conference in New York Tuesday, after Chief Operating Officer John Milligan gave Wall Street what it wanted and outlined the company’s broad brush strategy for blockbuster hepatitis C drugs Harvoni and Sovaldi, as well as its plans for new clinical NASH trials and even a hint about oncology strategy.
Milligan made the comments as part of a panel at the 17th Annual BIO CEO and Investor Conference at the Waldorf-Astoria in New York City. Last year, BIO CEO, a well-known annual schmooze-fest for the biotech community, had more than 1,400 attendees from 26 different countries, with around 750 investors and around 1,820 partnering meetings scheduled, according to event organizers.
This year it looks to be even bigger, as investors flock to find out which early-stage companies are advancing the most interesting drugs and products into a biotech sector that saw the Nasdaq Biotech Index gaining 11.2 percent in the fourth quarter, adding to another solid total return of 34.4 percent in 2014.
Covering all things hepatitis, Milligan’s wide ranging speech covered both Gilead’s ongoing pricing war with large payers like Express Scripts Inc. and its plans for pipeline development in 2015. Express Scripts started the price war between dueling hepatitis C drugs in October when it said it would change its standard formula to a new, cheaper AbbVie instead of choosing Gilead Science’s pricey Harvoni or Sovaldi treatments. Sovaldi and Harvoni sometimes have multiple stages of treatment, and cost $94,500 and $84,000 per course—or around $1,000 per pill.
But Milligan said Tuesday that in Gilead’s experience, many doctors have avoided other interferon containing regimens because of related complications. Simpler regimens seem to broaden the prescription base, which is an interesting insight for pharmaceutical companies looking to find the sweet spot on pricing and distribution.
“Open systems see more payer issues, where they say, “We don’t want to cover this, because we won’t derive the benefit,’” he said. That can lead to payers “pushing back” because they don’t see “instant” HCV savings, said Milligan. That in turn boosts large public health agencies like Medicare.
“We’ve had better luck w closed systems like the VA (Veterans Administration), which will realize long term savings from treating HCV,” said Milligan. When it comes to large payers taking on huge healthcare costs related to other drugs for disease like cancer, which have enormous price tags, Gilead seems to be sitting on the sidelines, despite sparking the initial debate.
“HCV and Sovaldi not necessarily representative of pricing/reimbursement issues more broadly,” said Milligan.
Milligan estimated that Gilead will have a long road ahead to effectively “cure” its initial test group of hepatitis C, which are typically in populations that already know they have the disease, such as in prisons or those covered by public health plans.
“It will likely take six years to exhaust that initial group of 1.6 million patients,” said Milligan. “Then we’ll tap groups unaware they have HCV."He added that he thinks the duration of treatment will also come into play as payers begin to treat huge swaths of the 3.2 million estimated Americans infected with hepatitis C.
“I’m not optimistic about four-week regimens for hepatitis C. I think it’s more likely that six or eight weeks will work,” he said. “When do you tell a hepatitis B patient they’re cured? Will be open to debate, experimentation in coming years.”
Still, the idea that hepatitis B will be “the new hep C” has had him thinking, he said."News of HCV cures has prompted conversations about doing the same for HBV. That’s a totally different story,” said, although he did hint that Gilead has not remained entirely disengaged. “We’re exploring some ideas [on hepatitis B]. But we don’t see new, big opportunities in virology at the moment in HBV and RSV.”.
Gilead‘s made $2.27 billion in revenue during Sovaldi’s first quarter on the market, despite its controversial $84,000 price tag. But drugmakers are increasingly looking towards “the next big global epidemic,” called NASH, or nonalcoholic steatohepatitis.
Milligan added that Gilead currently has two NASH studies enrolled, with a 48-week time point in 2015, and one with a 96-week overall, hard endpoint. “We will be pursuing molecules based on different biology in NASH,” said Milligan.
Milligan also outlined Gilead’s upcoming strategy for oncology, which will take four known pathways, BTK, PI3K JAK and SYK, and combine them for broader effect “Our projections for the company look very positive. It’s why we were confident enough to issue a dividend,” he said, adding the pace of the company’s innovation remains breakneck and exciting.’
“We had a drug on the market for a year [Sovaldi] and we made it obsolete.”
Overall, Milligan said he was pleased to see so much innovation in the field, and looked forward to where the science will lead in the coming year.
“We’ve seen a lot of really thoughtful biology and chemistry” in recent years he said, and that will apply both to new discoveries and possible partnership deals. “We feel no urgency for mergers/acquisitions, but if we did, it would be “thoughtful and reflective.”
Still, after Gilead Sciences, Inc. (GILD) sold $10.3 billion of its new hepatitis C drug Sovaldi in 2014, other drugmakers certainly interested in the potential for new hepatitis B treatments, or even cures.
Sovaldi sells for approximately $1,000 per pill, while its sister medication, also from Gilead, Harvoni, sold about $2.1 billion in 2014. Similar competitor AbbVie (ABBV)’s HCV medication Humira recorded $12.5 billion in sales and is now gaining on the coattails of AbbVie’s new hepatitis C treatment, Viekira Pak. Both Sovaldi and Harvoni have treatment rates close to 90 percent, making them essentially a cure for many patients—success several companies are attempting to duplicate soon.
OnCore Biopharma CEO Michael Sofia told Bloomberg in an interview. “With Sovaldi, we clearly brought innovation with the drug’s discovery and getting it to market. We feel we can translate that experience to hep B.”
The size of the market, and the chance to help the nearly 240 million people suffering from a chronic hepatitis B liver infection, makes that “cure” all the more tempting. Add to that the fact that at least 780,000 people die from hepatitis B annually, according to the World Health Organization, and you have a potent incentive for drugmakers to find new ways to tackle the disease.
Julie Papanek, a principal at Canaan Partners, told BioSpace in January that the funding side of biotech also continues to be interested in hepatitis B as an area of increasing interest.
Papanek, a former Genentech staffer who worked on commercial brand plans, forecasting and recommending modifications to Phase III trials designs for marketed and pipeline oncology products for the company, is now on the VC side of the business.
“We continue to look at areas of high unmet medical need such as Hep B, which I think is the next Hep C, particularly one company, Novira. We are also looking at other anti-infectives start-ups,” said Papanek.
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