Massachusetts biotech readies drug for market
By Thomas Kupperÿ
STAFF WRITER
December 7, 1997
Joshua Boger wants to give Agouron Pharmaceuticals of San Diego a taste of its own medicine.
His small Massachusetts biotech, Vertex Pharmaceuticals, says it has a powerful new protease inhibitor, the same type of AIDS drug that fueled Agouron's rise to profitability this year.
The company, based in Cambridge, is hoping for a repeat of the Agouron story by quickly grabbing a large piece of the market from bigger, established competitors. Less than a year after being introduced, Agouron's drug Viracept is catching up on market-leading Merck & Co.
Vertex hopes to top them both.
"Just as Viracept took share from Merck, it looks like Vertex will take share from Viracept," said analyst David K. Stone, who follows Vertex for Cowen & Co. in Boston.
Vertex's challenge took on added importance for Agouron this week, when the San Diego company abandoned work on its second drug prospect, the cancer treatment Thymitaq.
The news that Agouron will rely entirely on Viracept for the foreseeable future sent the company's shares down 25 percent in two days. The stock closed Friday at $31.25, up $2.12-1/2 for the day but still almost 19 percent lower than a week earlier.
For now, Agouron appears to be in a strong position. Indeed many analysts saw the plunge in Agouron's share price as an overreaction, and the company said it was "shocked" by the decrease.
Viracept is the first San Diego biotech drug ever to win approval and has gained 29 percent of the AIDS patients on protease inhibitors. Agouron believes it is gaining on Crixivan, the Merck drug.
In the cold calculus of the drug world, however, a new drug that could be hopeful news for AIDS patients might be bad news for Agouron's bottom line.
Shares of Agouron have fallen more than 40 percent from a mid-September high, partly because of a soft market for biotech stocks but also in part because of concern that Viracept's long-term sales could be overrated.
Observers say Vertex has advantages that could make it a formidable player, whether the drug is actually better than competing drugs or not. For one, the drug will be marketed by Glaxo Wellcome, a British pharmaceutical giant that has a strong position in AIDS products.
Glaxo also markets AZT and 3TC, two other components of the AIDS "cocktails" that include protease inhibitors.
Boger, Vertex's chairman and chief executive officer, also believes the Vertex drug is in fact superior. He claims advantages in nearly every area a doctor or patient might consider: fewer side effects, easier dosing schedule and less likelihood of patients' developing a resistance.
"It's at least as potent or more potent than anything out there," Boger said.
The drug, Amprenavir, could be a year away from the market, though. It's still in Phase III clinical trials, the final stage before approval. Vertex hopes to file for approval from the Food and Drug Administration next summer.
If it makes it, proven competitors will be waiting.
The four protease inhibitors already on the market have enabled some patients whose disease-fighting T cells were ravaged by HIV to fight off AIDS and resume largely normal lives.
Though some studies have suggested that patients eventually develop resistance to the drugs, most experts expect the number of people on them to increase. There's no known alternative that works better, and some 80 percent of HIV patients have yet to begin the treatment.
Since winning Food and Drug Administration approval in March, Agouron's Viracept has been adopted by some 60,000 patients. Sales of the drug reached $79.5 million in the most recent quarter, in which Agouron reported a profit of $3.6 million on total revenues of $91.9 million, including payments for research.
Some suggest that the fact that the pool of patients is growing will enable all the protease makers to prosper. Past experience supports this theory: While Agouron has cut Merck's share of the market to 40 percent from nearly 70 percent, the number of patients on Merck's Crixivan has actually increased. The other proteases come from Roche and Abbott Laboratories.
"Because Viracept has been so successful to this point, it's not as if their share's going to go to zero," Stone said.
One reason some patients hold off on beginning the protease regimen, however, is that all of the drugs on the market have significant drawbacks. There are side effects such as nausea and chronic diarrhea, along with sometimes onerous dietary requirements. Viracept patients are instructed to always eat at the same time they take the drug, while Crixivan patients are told not to eat before each dose.
Vertex believes the lack of such requirements with its drug will be a major selling point. Patients can eat whenever they want, and Boger said side effects will be much more manageable. Analysts and potential competitors, however, say Vertex has released little data to support its claims.
"We don't at the moment see it as a very big threat," Agouron's Donna Nichols said. "What we've seen has not been any better than what is already out there."
Like Agouron, Vertex is a proponent of "structure-based drug design," which involves using computer models to study disease-causing proteins and design chemical compounds to interact with them.
Vertex's technology has been popular with investors, giving the company a market valuation of just over $700 million and enabling the company to raise $149 million in a stock offering earlier this year.
Analyst Edmund Debler of Mehta and Isaly in New York is bullish on both Agouron and Vertex, largely because he expects the market for AIDS drugs to grow to $5 billion by 2000.
If that happens, he thinks Viracept could eventually bring in $1 billion a year for Agouron and other companies that market the drug overseas, while Vertex's drug could match or exceed that.
"We would say, without any significant data, that this probably going to be comparable to Crixivan and Viracept," Debler said. "Whether it will become No. 3 or No. 2 is hard to say." |
