Editor

Investors cheered over Human Genome Sciences Inc.'s Phase IIb news about two weeks ago that Albuferon worked when given at 900-mcg doses every two weeks with ribavarin to genotype 1, chronic hepatitis C virus patients - but not everybody is convinced.

HGS started as a genomics firm in the mid-1990s, and escaped that largely doomed category, progressing to become a worthy, well-pipelined player in biotech, with Albuferon (albinterferon alfa-2b) getting special attention lately. The Phase IIb trial tested the compound in patients na ve to therapy based on interferon alpha (of which Albuferon is a long-acting form), and results showed the 900- mcg drug group achieved a higher rate of sustained virologic response at 12 weeks after therapy was done, as well as more favorable health-related quality-of-life scores, compared to the treatment group given Pegasys (pegylated interferon alfa-2a) from F. Hoffmann-La Roche Ltd.

When disclosing the Phase IIb data, HGS said dosing had begun in the study known as ACHIEVE 2/3, a Phase III trial of Albuferon in combination with ribavirin in treatment-na ve, chronic HCV patients with genotypes 2 and 3. ACHIEVE is the second of two pivotal trials with Albuferon, developed in partnership with Novartis AG, and HGS aims to file global marketing applications in 2009. The 24-week study started ahead of schedule, and had not been expected until the second quarter.

But how much longer will interferon last in HCV? The January issue of the journal Antiviral Research cited strong in vitro efficacy of combining an HCV protease (BILN-2061, from Boehringer-Ingelheim International GmbH) and a polymerase inhibitor (A-782759, from Abbott Laboratories) without interferon, the first trial of its kind. Data showed the pair of direct antivirals led to greater reductions in HCV RNA as compared with each of the individual components alone or the combination of A-782759 and interferon. Researchers found no resistant clones to the combo in a longer-term assay.

Terence Flynn, analyst with Lazard Capital Markets, predicts that other firms with later-stage direct antivirals not dependent on interferon could launch more serious trials. Those parties include Vertex Pharmaceuticals Inc. and Janssen Pharmaceutica NV, who last summer entered a deal valued as high as $545 million to develop and commercialize VX-950. Phase II data from the trials known as PROVE are expected this year.

Janssen, a unit of Johnson & Johnson, will have exclusive rights in Europe, South America, the Middle East, Africa and Australia, while Vertex will hold commercial rights in North America. Each company will be responsible for drug supply in its territories.

Vertex got $165 million upfront, plus up to $380 million in milestone payments based on the successful development and launch of VX-950 in Janssen's territories, along with a tiered royalty in the mid-20 percent range on all sales in those countries. Janssen will take over responsibility in its region for certain third-party royalties, typically in the small single digits. Vertex remains in charge of VX-950's global development plan, as another J&J company, Tibotec Pharmaceuticals Ltd., leads the charge for Janssen. Vertex also expects to be reimbursed 50 percent of its development costs.

Also in the game: ViroPharma Inc. and Wyeth, with the oral polymerase inhibitor HCV-796, who offered preliminary Phase Ib data in August proving antiviral effects across several genotypes. The study was a randomized, double-blind, placebo-controlled study of ascending multiple doses. While the target enrollment for each of four cohorts was 16 subjects, the data included between nine and 11 patients in each cohort getting treatment with HCV-796 and pegylated interferon alfa-2b (in this case PEG-Intron, from Schering-Plough Corp.), and 15 patients in all given pegylated interferon alone.

Patients received doses of 100 mg, 250 mg, 500 mg or 1,000 mg of HCV-796 or a placebo every 12 hours for 14 days, and PEG-Intron at a 1.5 ug/kg/dose on days one and seven. Across all dose groups, the combination of HCV-796 and PEG-Intron yielded a mean viral reduction of between 3.3 and 3.5 log10 (99.95 percent to 99.97 percent) after the 14 days, compared with a 1.7 log10 with PEG-Intron alone, with no dose-limiting toxicities. In October, ViroPharma and Wyeth kicked off a Phase II trial with the compound in 267 patients, evaluating HCV-796 with pegylated interferon plus ribavirin.

Flynn, who maintains a "sell" rating on HGS, predicted Vertex/Tibotec or Viropharma/Wyeth would be the most likely to start a combo trial without interferon, probably first testing a direct anti-viral in patients who don't respond to interferon or ribavarin.

In late October, the FDA's Antiviral Drugs Advisory Committee, hammering out trial guidelines, said combo studies of two or more investigational agents is a smart route for chronic HCV therapy, and should be done after separate Phase IIb work is finished.

Panel members made note of the development path for HIV drugs such as Tibotec's DUET experiments with TMC125, a next-generation non-nucleoside reverse transcriptase inhibitor.

The fading of interferon in HCV is a long-term risk to HGS' Albuferon, Flynn wrote in a February research report, but antivirals in the protease class loom nearer, since they might reduce therapy duration and shrink interferon's market. Flynn, though encouraged by the Phase IIb data comparing Albuferon with Pegasys, held off judgment, given higher discontinuation rates in all Albuferon-dosed arms. He wants a more complete analysis of the side-effect profile, too.

Sanguine about HGS is Jason Kolbert, of Susquehanna Financial Group, who praised the firm for "hitting on all cylinders" as the year began. Management, he noted in a report, plans to push dose titration in the Phase III trials, and discontinuation rates would be expected to improve. Flynn was skeptical. "It's a thin line," he said. "If you titrate your dose, you're compromising your efficacy."

Still, Kolbert called HGS a "low-risk story," thanks to Phase III programs for Albuferon and LymphoStat-B (belimumab), a lupus therapy. Last month, the company and partner GlaxoSmithKline plc initiated the first of two pivotal Phase III trials with LymphoStat-B (belimumab). UBS Securities LLC analyst Annabel Samimy forecast a late 2009 or early 2010 regulatory filing based on the start of the second LymphoStat-B trial in the first half of 2007 and completion of enrollment in both trials in 2008.

The design was formalized under a special protocol assessment by the FDA and reviewed by the European Agency for the Evaluation of Medicinal Products, incorporating several lessons learned during a Phase II trial that missed its primary endpoints of reducing lupus signs and symptoms at week 24 and increasing the time to first lupus flare over a 52-week period.

More sifting of the data revealed a statistically significant improvement in lupus signs and symptoms at week 52 for serologically active patients. The Phase III program hinges on those three elements - a primary endpoint of improving lupus signs and symptoms, analysis at week 52 and inclusion of only serologically active patients.

To measure the improvement in lupus signs and symptoms, HGS will use a composite endpoint comprised of measures used in the Phase II trial including: a reduction from baseline in the SELENA SLEDAI score of at least four points; no worsening in PGA; no new BILAG A organ domain score; and no more than one new BILAG B organ domain score from baseline. The SELENA SLEDAI test measures multiple factors associated with lupus, while the PGA assesses disease worsening, and the BILAG monitors organ involvement.

But Flynn excluded Lymphostat-B from his model. "We don't expect any [clinical] activity at all," he told BioWorld Financial Watch, citing HGS' composite response rate endpoint, retrospective analysis. The drug's Phase II data for rheumatoid arthritis, when laid alongside those of Rituxan (rituximab) from Genentech Inc. are "not that favorable either," he added.

"And they don't have a dose response," Flynn said, comparing Lymphostat-B to atacicept, the compound from ZymoGenetics Inc. and Serono SA, who in November reported positive data from a Phase Ib study at the American College of Rheumatology meeting in Washington. Atacicept patients showed "somewhat of a dose response with that drug, in terms of immunoglobulin levels," he said.

Kolbert said HGS' recent government contract for the anthrax therapy ABthrax, as well as financial restructurings, beefed the firm's bottom line. The $165 million government contract, awarded in June, calls for HGS to contribute 20,000 doses to the Strategic National Stockpile.

That's not enough for Flynn, who noted that HGS has few catalysts in the coming year, and no Phase III data likely due until 2009. The company's shares were trading at about $10.65 Friday. "We have an $8 price target, so there's still room to go down," he said.