Editor

Nothing was more in the news of biotech during the past week than hepatitis C virus. Thanks to setbacks and blowups with drug candidates, HCV has taken plenty of headline space in general this year, and the space seems due to grow ever hotter, as firms take aim at an indication that's proving much trickier than many suspected.

"The landscape is a lot more complex on the side-effect profile side than we thought 12 months ago," said Kevin DeGeeter, analyst with Oppenheimer & Co. "It's much easier in a replicon bottle to evaluate potency than it is to get a read with the models we have now."

Also, weak or incomplete preclinical work might be blamed for many of the HCV stumbles, said James Smith, president and CEO of Genelabs Technologies Inc., which raised $23.7 million to push three in-house preclinical HCV programs. "Some people rushed candidates into the clinic that weren't really ready for prime time," he told BioWorld Financial Watch.

Smith's firm hopes to get around clinical problems by being cautious, thorough, testing early, and hopes to dodge the pain of one-shot fizzles by going after varied targets. One HCV drug targets the nonstructural 5a (NS5a) protein, another targets NS4b and the third take on the entire HCV replicase.

"Each has the potential to be complementary with the other," Smith noted, touching upon the trend in HCV which, like HIV, likely will be conquered - at least to some degree - with combination regimens.

None of the money $23.7 million Genelabs raised will go toward the awaited, FDA-required, third Phase III trial with its Prestara (prasterone), a synthetic form of the hormone dehydroepiandrosterone for lupus. In 2004, Prestara gave forth disappointing results from what the company figured would work as a confirmatory study.

"The drug worked, but the trial design failed to capture it," Smith said. "If you look at the totality of the data, it's quite clear those patients who continued to get the drug continued to build bone," and the FDA is willing to accept bone mineral density at the lumbar spine as endpoint.

Genelabs has a special protocol assessment deal with the agency, and is trying to find a non-dilutive way to fund the necessary Phase III trial. Analyst DeGeeter said that, if the available cash found "didn't quite match up" to the full $25 million, "an interesting discussion" might ensue within the walls of Genelabs.

"The company line is, not a single dollar raised in the latest financing will go into that study," but once the money is in the door, it becomes part of the cash pool, he said. "We'll see." DeGeeter, though, finds no reason to expect success with another Phase III trial, and said the Prestara bid only draws attention away from the much more promising HCV effort.

Aside from Prestara in lupus, Genelabs has five potential ways to win in HCV, including the three in-house programs and deals with such players as Novartis AG and Gilead Sciences Inc.

The Gilead collaboration is focused on early-stage nucleoside inhibitors of HCV polymerase, and could mean as much as $46 million to Genelabs if a compound reaches the market. In the Novartis arrangement, which DeGeeter described as "a little more narrowly defined," Genelabs is responsible for drug discovery of non-nucleoside HCV polymerase inhibitors, and the overseas pharma giant will handle development and commercialization, with an option to extend research funding for a third year. Genelabs entered the Novartis pact in June 2006, getting $12.5 million up front with $7.5 million more due in the next two years, plus as much as $175 million in milestone payments.

Another firm with hepatitis news during the week: Pharmasset Inc., which kicked off a Phase III trial with its once-daily pyrimidine nucleoside analogue, clevudine for hepatitis B virus, thereby gaining a $1 million milestone payment from the firm's partner Bukwang Pharm. Co. Ltd., which already sells the compound as Levovir capsules in South Korea. Studies will enroll 856 nucleoside treatment-naïve patients at about 140 sites to support registration in the Americas and Europe.

Two 48-week trials are designed to show the superiority of clevudine 30 mg over Hepsera (adefovir dipivoxil, from Gilead) 10 mg, each administered once daily as monotherapy. Study 305 will enroll about 376 chronic HBV e-antigen positive patients (HBeAg+), and Study 306 will sign up about 480 chronic HBV e-antigen negative patients (HBeAg-).

If the 48-week data prove favorable, Pharmasset plans to forward them to the FDA and ask for approval, though the studies will keep going to week 96 for more data, while watching for sustained virologic response, or SVR, a measure defined as undetectable virus 24 weeks after stopping therapy (where clevudine proved strong in Bukwang's studies).

SVR has been the endpoint of choice in drugs for hepatitis C virus, Schaefer Price, president and CEO of Pharmasset, told BioWorld Financial Watch, but not in HBV.

Pharmasset also has R7128 for HCV. Positive Phase I results last month led the company and partner F. Hoffmann-La Roche Ltd. to plan a 28-day study of R7128 with Pegasys and ribavirin in treatment-naive patients later this month. R7128 is a prodrug of PSI- 6130, an oral cytidine nucleoside analogue HVC polymerase inhibitor. Roche's own nucleoside molecule, in Phase IIb studies, worked well when tested in the same combination, which is the standard of care.

Pharmasset has another HCV nucleoside not part of the Roche deal, and it appears 100-fold more potent than the partnered one, overcoming drug resistance nicely, though the company has not decided how far to try advancing the drug on its own.

Less happy hepatitis news came as fallout from earlier trouble. Idenix Pharmaceuticals Inc. laid off about one-third of its staff and reconfigured its deal with Novartis for the approved HBV drug Tyzeka (telbivudine), so that Idenix can work more on early stage compounds for HCV as well as HIV.

Novartis is taking over all responsibility for Tyzeka - cleared by the FDA about a year ago and branded Sebivo outside the U.S. - while paying royalties to Idenix. The story is hardly all gloom, though, since the restructuring leaves Idenix able to fund its work through 2009.

The firm has a non-nucleoside reverse transcriptase inhibitor, IDX899, for HIV in Phase I/II trials. The next-generation nucleoside polymerase inhibitor program for HCV includes preclinical IDX102 and IDX184, as well as efforts for HCV with a non-nucleoside polymerase inhibitor and protease inhibitor.

This summer, the FDA nixed the company's nucleoside inhibitor valopicitabine for HCV because of gastrointestinal side effects, a move that trimmed 38 percent of Idenix's stock, but Novartis, which owns 56 percent of Idenix and holds the right of first refusal on Idenix's pipeline, exercised its option to license the compound.