Biotechnology
Industry Overview 
February 3, 2009 Our Perspective On HCV Development For 2009
Analysts
Rachel McMinn, Ph.D.
(415) 646-7229
rachel.mcminn@cowen.com
 
Masha Chapman
(415) 646-7224
masha.chapman@cowen.com
 
 
          
 
 
          
 
 
          
 
 
          
 
 
          
Please see addendum
of this report for
important disclosures.
www.cowen.com
Conclusion: The HCV development landscape continues to progress and
expand. While only VRTX and SGP have products in Phase 3 development, 6-7
companies have products in Phase 2b or are expected to start Phase 2b in 1H09,
and there are nearly 20 products in early human clinical trials. Protease
inhibitors remain the most mature class of HCV antivirals, although we expect a
number of other classes to gain more visibility in 2009 including: polymerase
inhibitors, NS5a inhibitors, and cyclophilin analogs. Roche has the most
advanced portfolio of products across product classes, while BMY appears to
have the largest number of unique, albeit early stage clinical programs. We
expect the April EASL 2009 meeting to contain incremental but not game
changing new data relative to prior data disclosures. 2010 appears a critical
year for the field, with Phase 3 data for both VRTX and SGP, as well as key Phase
2b data for next generation programs from Boehringer Ingelheim, GILD, VRUS,
and Debio, and possibly from ITMN/Roche, JNJ/Medivir, MRK, and PFE, if
timelines hold.
■  HCV Leaders Executing. VRTX and SGP are both edging closer to market
with their first generation HCV protease inhibitors, and VRTX remains on
track for a 2H010 NDA filing and early 2011 launch. We continue to view
VRTX’s telaprevir as having a competitive profile based on its potential for
(1) meaningfully improved SVR rates in a broad treatment failure
population, (2) treatment with 24 weeks of therapy the majority of naive
patients, and (3) strength of 2x/day dosing.
■  Followers Taking Portfolio Approach. There are four clinically
validated direct antiviral approaches in HCV (protease inhibitor, nuc and
non nuc polymerase inhibitors, NS5a), and several other indirect
immune/host-based approaches. Nearly all large pharma companies have a
dedicated and growing early stage HCV pipeline, and we expect internal
discovery combined with partnerships and acquisitions to bolster pipelines.

What Will 2009 Bring For HCV Development?
Expected Advances/Themes in 2009
•  Protease Inhibitor Phase 3’s Continue. Vertex (VRTX, Outperform, $32.75)
and Schering-Plough’s (SGP, Neutral, $17.47) protease inhibitors will
continue Phase 3 dosing throughout 2009. SVR data for both products are
expected in 2010.
•  Next Generation Protease Inhibitor Phase 2b’s Start. Boehringer
Ingelheim (N/R) will continue dosing in its protease inhibitor treatment
naïve Phase 2b study, and we expect with refined dosing will initiate a
treatment failure study in 2009. ITMN/Roche (N/R), Tibotec/Johnson &
Johnson (JNJ, Outperform, $57.69), and Merck (MRK, Neutral, $28.43)) are
slated to initiate Phase 2b studies for their protease inhibitors.
•  Best In Class Nucleoside Polymerase Inhibitor Faces 12-Week Safety
Hurdle. Pharmasset (VRUS, Outperform, $11.28) and partner Roche’s
nucleoside polymerase inhibitor R7128 will start an initial ∼100 patient
safety cohort in a Phase 2b study in 1Q09, and critical 12-week safety data
should be available by year-end. While initial 4-week clinical data have been
very clean, 12-week data are make or break for the program.
•  Non-Nuc’s Gain A Bit More Steam. Gilead Sciences’ (GILD, Outperform,
$51.87) lead non-nuc GS-9190 should complete enrollment in 1H09 with data
in 2010. Anadys Pharmaceuticals (ANDS, Outperform, $5.40) potentially best
in class ANA598 should wrap up a Phase 1b and by mid-2009 initiate a
28-day study. Data from Pfizer’s (PFE, Neutral, $14.89) ‘554, Abbott’s (ABT,
Outperform, $55.57) ABT-333, and MRK’s MK-3281 should be available at the
EASL 2009 meeting.
•  More Ritonavir Boosting? SGP recently announced its next generation
protease inhibitor ‘518 takes advantage of ritonavir boosting to improve
dosing to 1x or 2x/day. Our consultant suggested other companies are
looking to pursue this strategy, although we are somewhat skeptical of this
approach given the potential interaction with HIV medications and would be
complicated to study in the HIV-HCV co-infected population.
•  Indirect host targets getting more visibility. Cyclophilin analogs in HCV
development target the host immune system and initial data have shown
encouraging antiviral activity. We expect additional data in 2009.
Expected Failures in 2009
•  At least one of the next generation protease inhibitors could fail due to
safety (Boehringer Ingelheim, ITMN/Roche, Tibotec/JNJ, MRK).
•  PFE’s ‘554 could show unacceptable virologic breakthrough in the 28-day
study which employs 2x/day dosing, based on its clear 3x/day profile.

Potential For Acquisitions/Partnerships
•  A number of companies have un-partnered HCV programs that could be
folded into a larger portfolio umbrella. Companies with clinical stage assets
looking to partner programs include: ANDS, Phenomix (N/R), ViroChem (N/R),
and Debio (N/R). VRTX retains U.S. rights for telaprevir and its earlier stage
portfolio, and could be seen as an acquisition candidate.
Expected/Potential Data At EASL 2009 (April 22-26)
•  First Novel Agent Combination Data. Roche initiated last year a
combination study with the Roche/VRUS nucleoside polymerase inhibitor
R7128 and the Roche/ITMN protease inhibitor ITMN-191, and data from the
initial cohorts are expected at EASL. This study represents the first steps
towards combining new classes of direct HCV antivirals and will help inform
the field. Compared to either product alone, we expect the combination will
show (1) additive or synergistic antiviral activity; and (2) lower potential for
resistance.
•  Final PROVE 3 Data for VRTX’s telaprevir. We expect a mid-teens SVR rate
for the 48-week control group vs the already reported 52% SVR rate for the
24-week based telaprevir group.
•  Impact of EPO on boceprevir SVR rates. SGP has indicated there will be
additional SPRINT-1 data showing a favorable benefit for EPO on SVR with
boceprevir. However, given the scatter in the arms reported to date, one of
our consultants speculates any real trend is unlikely. We would view a strong
signal that EPO is required to achieve SVR as a negative for this program
from a regulatory perspective in the U.S., and one of our European
consultants labeled this outcome a commercial “non-starter” in Europe.
•  Other protease inhibitors: (1) ITMN/Roche’s ITMN-191 triple combo
2-week data (topline already released in Jan 09 press release); (2) proof of
concept data for SGP’s ‘518 and possibly VRTX’s VX-500, although both
companies are likely to try to focus physicians on first generation products
in lieu of showing early stage next generation data; (3) additional dosing data
for Boehringer Ingelheim’s ‘335, MRK’s MK-7009, JNJ/Medivir’s TMC-435—
companies at AASLD 2008 had a lukewarm reception from the conference
organizers, which we expect to be rectified at EASL with more podium
presentations.
•  Other data of interest: (1) PFE’s ‘554 28-day data; (2) proof of concept data
for: ABT’s ABT-333, ANDS’ ANA598, Idenix Pharmaceuticals’ IDIX-184, MRK’s
MK-3281; (3) additional data for Bristol-Myers Squibb’s (BMY, Neutral, $21.99)
impressive NS5a inhibitor — expecting more fanfare around this product at
EASL, although initial data already compelling from AASLD 2008.