Analysts Say Education Campaign Will Spur Hepatitis C Drug Stocks
June 22, 1998 4:23 PM
By Jennifer Fron Mauer, Staff Reporter
NEW YORK -(Dow Jones)- With blood banks around
the country getting set to send letters to people who may
have been infected with the hepatitis C virus through
transfusions, investors are beginning to turn their
attention to companies working on treatments for the
disease.
Over the next few years, letters will be sent to 300,000
people whom blood banks have identified as having
received blood or blood products from a donor who
later tested positive for hepatitis C, according to Damon
Thompson, a spokesman for the Department of Health
and Human Services. They are being encouraged to
come in for testing and possibly treatment.
Some of the companies investors are looking at include
Schering-Plough Corp. (SGP), ICN Pharmaceuticals
Inc. (ICN), SciClone Pharmaceuticals Inc. (SCLN),
Maxim Pharmaceuticals Inc. (MMP) and Chiron Corp.
(CHIR).
More than four million people in the U.S. are infected
with the hepatitis C virus, according to the Centers for
Disease Control and Prevention. Many are unaware of
their illness, which, over time, can cause chronic liver
inflammation, cirrhosis and possibly cancer.
About 10,000 people die each year from the disease,
which was first identified in 1989. That rate is expected
to more than triple in the next 10 years and to surpass
AIDS by 2000. Like AIDS, the hepatitis C virus is
passed via blood and sex and can mutate, making
treatment difficult.
The government is planning a broad public-education
campaign to encourage people who have used
intravenous drugs, had tattoos, had multiple sex partners
or participated in other high-risk activities to get tested,
too.
What that means to investors, industry watchers say, is
that more people are about to be seeking treatment for
the disease.
World-wide sales for hepatitis C treatments currently
are estimated at $1.23 billion, according to Shawn
Singh, senior vice president of SciClone
Pharmaceuticals, which is working on the hepatitis C
treatment Zadaxin. Singh said he expects world-wide
sales to increase to $3 billion in the next five years as
new products come on the market.
The most obvious hepatitis C plays are Schering-Plough,
of Madison, N.J., and ICN Pharmaceuticals, of Costa
Mesa, Calif., said Prem Lachman, a partner with the
Galleon Group.
Earlier this month, the Food and Drug Administration
approved a combination therapy of the two companies'
drugs, ICN's Rebetol and Schering-Plough's
alpha-interferon product Intron A, for use by chronic
hepatitis C patients who have relapsed since using other
therapies for the disease. The compbination of the two
drugs, which separately already treat other diseases, will
be called Rebetron. Biogen Inc. (BGEN), of
Cambridge, Mass., discovered the ingredient that
Schering sells as Intron A.
Last week, Schering-Plough, which has the exclusive
right to sell the combination therapy world-wide except
in Europe, filed a supplemental new drug application to
use the drug in a wider pool of patients.
Lachman cited two other companies that also make
alpha interferon, which is the most common treatment of
hepatitis C but works only in about 20% of patients. The
development of new products to be used in combination
with alpha interferon to treat hepatitis C should boost
sales, analysts said.
Amgen Inc. (AMGN), of Thousand Oaks, Calif., makes
Infergen, while Switerland's Roche Holding AG makes
Roferon A. Roferen is co-promoted by Gilead Sciences
Inc. (GILD).
Further down the pipeline, SciClone Pharmaceuticals
and Maxim Pharmaceuticals are both developing drugs
that can be combined with alpha interferon to treat
hepatitis C.
Mario Corso, an analyst with ABN-AMRO Inc., says
plenty of room exists in the market for new therapies.
"It's a very under-treated market." he said "No one will
be able to develop a treatment that will help everyone."
Because the virus mutates, a combination of many
therapies will be necessary, he said.
SciClone's Zadaxin will begin pivotal late-stage, or
Phase III trials as soon as the company finds a
marketing partner, Singh said.
Maxim, which just completed an early-stage, or Phase I
trial on its Maxamine drug, expects to start a Phase II
trial in the second half of this year, according to Larry
Stambaugh, the company's president, chairman and chief
executive.
Chiron, which already makes a test for detecting
hepatitis C that it licenses to Ortho Diagnostics Systems,
a unit of Johnson & Johnson (JNJ), is working on a
vaccine for the virus. Currently in Phase I trials, the
vaccine will likely take five to 10 years to get to market,
Eugene Melnitchenko, an analyst with Sutro & Co.,
said.
- By Jennifer Fron Mauer; 201-938-5287;
jennifer-fron.mauer@cor.dowjones.com
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