HIV Protease Drug Stocks Plummet As Potential New Therapy Emerges
Dow Jones Online News, Tuesday, June 30, 1998 at 19:05
NEW YORK -(Dow Jones)- Shares of companies that make
protease-inhibitor drugs to treat HIV patients plummeted Tuesday in the
wake of a potential new therapy.
A report in Tuesday's edition of The Wall Street Journal said
researchers at the 12th World AIDS Conference in Geneva unveiled a
combination drug therapy that could change the way HIV infections are
treated.
The therapy, built around an unapproved drug called Sustiva from
DuPont Co. (DD), would reduce the number of HIV-fighting pills patients
have to take to three a day from 10, the Journal reported.
"If the new research holds up, many AIDS physicians and activists
here believe it will be possible to treat people with HIV without using
the so-called protease drugs that revolutionized treatment of the
disease just two years ago," the article said.
Potential competition to the companies that make and market protease
drugs drove their shares downward Tuesday, several industry experts
said.
"We've known for a long time that there would be new competition for
these protease inhibitors and it looks like today is the first day the
market is realizing it," said Dr. Charles Engelberg, an analyst with
AmeriCal Securities.
Vector Securities International Inc. analyst Michael King, who is
attending the AIDS Conference in Geneva, said the stock drop is an
overreaction. "The death of protease inhibitors has been wildly
exaggerated," King said, adding that he doesn't expect patients to stop
taking protease inhibitors if Sustiva were approved.
NationsBanc Montgomery Securities Inc. analyst David Crossen agreed,
noting that while the news raises the possibility of using a nonprotease
combination to treat HIV, this wouldn't eliminate protease usage
altogether. The growth rate for protease drugs, however, could slow,
which could affect the profits of companies that market them, he said.
Agouron Pharmaceuticals Inc. (AGPH) is one such company. With a
market share of about 34% in the protease-inhibitor industry, the La
Jolla, Calif., biotechnology concern's shares were hit hard Tuesday,
losing as much as 14% before closing at $30.313, down $3.63, or 9.2%, on
Nasdaq volume of about 3.2 million shares, which was five times the
daily average of about 653,000 shares.
Cross said he downgraded Agouron, whose main product is Viracept, to
"hold" last year in anticipation of increased competition in the
protease-inhibitor market.
Vertex Pharmaceuticals Inc. (VRTX) took an even worse hit, plunging
as low as $21.50, compared with its previous 52-week low of $25.25, in
December. The stock closed at $22.50, down $5.125, or 19%, on Nasdaq
volume of about 3.9 million. The average daily volume is about 220,000
shares.
Vertex's lead compound, amprenavir, is an HIV protease inhibitor
making its way through the final stages of clinical development. The
Cambridge, Mass., company's development and marketing partner for
amprenavir is Glaxo Wellcome PLC (GLX).
Crossen said Vertex's latecomer status in the industry - its drug
hasn't yet been approved - makes the implications for the company "more
severe."
The potential new HIV therapy Sustiva can be taken as one pill once a
day, the Journal reported. Researchers say the data show that a
once-daily Sustiva pill used with a new twice-a-day pill combining two
older drugs - AZT and 3TC from Glaxo Wellcome - can counter HIV as well
or better than AIDS "drug cocktails" that requre 10 to 20 pills daily.
NationsBanc's Crossen said there is a lot of resistance appearing in
patients taking combination therapy. "Protease inhibitors are not the
miracle drug," he said.
The Journal article said there are researchers who say that because
Sustiva works differently than the protease drugs, the new combination
therapy may prove a much-needed alternative for some people who have
developed protease resistance.
But Vector Securities' King maintained it's premature to say exactly
what Sustiva's role will be in the industry.
Other biotechnolgy stocks that were down Tuesday were Gilead Sciences
Inc. (GILD), which has a potential HIV inhibitor Preveon. The shares
closed at $32.63, down $3.63, or 8.7%. Biochem Pharma Inc. (BCHE) also
closed lower in the day's session, at $26.50, down 50 cents, or 1.9%.
- Melanie Trottman 201-938-5260
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