Hepatitis C In Play for 2013?

Terry is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

In the world of biotech stocks a lot of companies are starting to incorporate Hepatitis C treatments into their pipelines. Hepatitis C is starting to garner a lot of attention, and these biotech companies are not wrong to be chasing this target disease. Why, you ask? Because there are currently 170 million people worldwide infected with Hep C, and this could mean huge opportunity for biotech companies that are in this field. Hep C is a terrible disease because it causes the liver to become scarred in a process known as Cirrhosis. About 3% to 5% of Hep C patients can get liver cancer from Hepatitis C, and this disease occurs from unscreened blood transfusions or syringes that have not been sterilized correctly. The current options out there for treatment are a deadly cocktail of drugs known as interferon and Ribvavirn, which have a lot of toxicity. Thus patients need all the help they can get for Hepatitis C infections.

BMY dealt a huge shocking blow

In August of 2012 Bristol-Meyers Squibb Co. (NYSE: BMY) had some serious trouble in the Hep C, space as one of their mid-stage trials for BMS-986094 was stopped when one of their patients suffered heart failure. There was no direct link , but the FDA had to stop the trial and investigate whether or not this drug was safe for patients to continue taking. This was unfortunate for Bristol-Meyers, as they had previously in the year purchased Inhbitex, which was the company that worked on the Hep C drug "BMS-986094." Bristol-Meyers had to dish out $2.5 billion dollars to buy out Inhibitex in the race to beat everyone else to the Hepatitis C space, and now they are left out in the cold with this setback. 

Another 2 Companies take a bite of dust?

So Bristol-Meyers stopped it's investigational drug for Hepatitis C for now, and thus the race for this huge market space continued--or did it? Well things didn't go so well for Idenix Pharmacueticals (NASDAQ: IDIX) and Gilead Sciences Inc., as the FDA had to place a hold on Idix's and Gilead's drugs.  Both of these companies use a drug to treat the Hepatitis C virus that have nucleoside inhibitors. These drugs that used nucleoside inhibitors were put on hold to be investigated for heart failure in patients. Also recently on Feb. 5 Idix announced that it would stop development of IDX184 and IDX19368, which lowers the amount of drugs this company currently has in its pipeline. It has two Hepatitis C antiviral drugs that are in preclinical stages, and one drug in phase 2 trials. This drug currently in phase 2 is named "IDX719," and Idenix hopes that it's stock price can go back up in value with this drug.  Will this Hep C drug in production by Idenix be the last hope for the struggling company?  That remains to be seen, but one thing for sure is that this company is now a bigger risk to play for in the Hepatitis C space because of it's diminishing pipeline. 

These Companies are tackling Hep C

With so many failures and problems for hepatitis C drug makers, are there any companies of value in the Hep C space? Sure there are, but there are very limited options. Two that I can think of are Achillion Pharmaceuticals Inc. (NASDAQ: ACHN) and Vertex Pharmaceuticals Inc. (NASDAQ: VRTX), both of which are safe for now from the FDA, as they don't use nucleoside inhibitors for their drugs.  Vertex needs to get itself together though and hope that the new drug that it's working on for Hep C doesn't cause problems for them like their current Hep C drug Incivek, which the FDA had to put a black label box warning on due to the fatal skin rashes it causes. Achillion Pharmaceuticals, on the other hand, is living the high life in the Hepatitis C space and seems to be a good value for the long term. Not just because of the opportunity once it gets one of it's Hep C therapies to market, but also because of the buzz about Achillion being bought out by a big pharma company. Just like Bristol-Meyers bought Inhibitex for $2.5 billion, it wouldn't surprise me for Achillion to receive tender offers because of how bad all these pharamaceutical companies want to be in the Hepatitis C space. 

Fool's take away lesson

There is some good money to be made in this Hepatitis C space with the right company in mind for long term investors. Just be cautious and know that the FDA can step in at anytime and halt any study that it deems to be dangerous for patients. With that said, some of these biotech companies only have Hepatitis C drugs as their main pipeline and nothing else--indeed, Achillion and Idenix's whole pipeline is compromised of only Hep C drugs. Therefore one failure may signal future failure for the entire company.  If I had to stick with one of these players, though, I would go with Achillion, as their trials seem to be progressing a lot better than other Hepatitis C drug makers--not to mention the fact that I feel it will soon receive tender offers, and eventually be bought out by some big pharma company. With all that said it seems that Hepatitis C is in play for 2013, you just have to pick the right company for portfolio success. 

 


Rennrunn has no position in any stocks mentioned. The Motley Fool recommends Vertex Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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