June 9, 2017
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – When it comes to investing in drug companies with a focus on hepatitis C (HCV) treatments, wise investors are aware the patient pool is shrinking, in large part due to the efficacy of Hep C drugs, such as those marketed by California-based Gilead Sciences .
The company has made billions of dollars off of its blockbuster treatments Harvoni and Sovaldi. However, Gilead is projecting revenues to dramatically drop from $14.8 billion in 2016 (down from 2015 revenues) to between $7.5 and $9 billion this year. But, if Hep C stocks are what investors are after analyst Brian Orelli has some suggestions on where to put your money.
Writing in The Motley Fool, Orelli takes a look at four companies with strong Hep C pipelines and analyzes growth potential.
Watertown, Mass.-based Enanta is the company Orelli said is the best play for investors looking for a hepatitis C sales rebound or stabilization. Enanta is entirely dependent on the HCV market, particularly from a developmental deal it has with AbbVie. Enanta helped develop the glecaprevir half of AbbVie’s HCV drug paritaprevir. In April, Enanta said the combination drug that targets HCV patients with genotype 1, 2, 4, 5 or 6 and compensated cirrhosis “achieved sustained virologic response at 12 weeks post-treatment” in 99 percent of patients. Shares of Enanta are trading at $30.05.
Speaking of AbbVie , it is the company Orelli says has the best opportunity to capture more market share. That’s primarily due to a drug the company is developing that is a combination of glecaprevir and pibrentasvir. “AbbVie has data for glecaprevir/pibrentasvir in all six of the major hepatitis C genotypes, many of which can be cured with just eight weeks of treatment, making it easier to compete against Gilead,” Orelli said of the combination therapy. The combination therapy is under review in the U.S. and Europe. Orelli said AbbVie is hoping to begin marketing the drug this year. Shares of AbbVie are trading at $69.14.
Analysts have been waiting for Gilead to pull the trigger and acquire new therapies through a deal with other companies. Orelli said Gilead has a large cash stockpile it can use to expand its pipeline through a deal – although when such a deal will happen is anyone’s guess. In addition to its HCV drugs, Gilead is focused on the HIV market and building out its NASH (nonalcoholic steatohepatitis) and cancer programs. Shares of Gilead are trading at $64.18.
When looking outside of Hep C-dependent pipelines, Orelli said Merck is the clear winner, primarily due to the explosive potential of cancer drug Keytruda. Sales of Keytruda soared 134 percent over last year’s sales, Orelli said. That is only expected to grow as Keytruda continues to be examined for additional indications and in combination with other drugs. In May, the U.S. Food and Drug Administration approved Keytruda in combination with Eli Lilly ’s Alimta as a first-line treatment of metastatic nonsquamous non-small cell lung cancer (NSCLC), irrespective of PD-L1 expression. The latest FDA approval is part of a long string of regulatory successes the drug has shown as it has received regulatory approval for numerous cancer indications including lung, head and neck cancer, melanoma and Hodgkin lymphoma. Shares of Merck are trading at $63.79.
