West Coast Editor

In the first of two pivotal Phase III studies yielding data, known as VISER1, Valeant Pharmaceuticals International Inc.’s nucleoside analogue and ribavirin prodrug, Viramidine, for hepatitis C virus missed its efficacy endpoint of non-inferiority with ribavirin on an intent-to-treat basis.

But the specialty pharma company blamed anomalies in trial data from regions outside North America and Europe, pointed to dose responses based on weight with safety and said plans for a late-2007 launch remain on track.

Valeant’s shares (NYSE:VRX) ended Tuesday at $16.03, down $2.65, or 14.2 percent, after trading as low as $14.75.

Andrew McDonald, analyst with ThinkEquity Partners in San Francisco, predicted the Phase III failure last summer, when he pronounced Viramidine "doomed" after examining Phase II results.

He maintained his "sell" rating Tuesday, with a price target of $13.

"I’m deeply disturbed by the fact that Valeant is unable to analyze their own data and do the right thing" - that is, stop development of Viramidine, said McDonald, who predicted the drug will fail in the second Phase III trial, known as VISER2.

The company’s scientists "should all be fired," he added. "They’re delusional, at this point."

Others aren’t so sure. Robert Gish, medical director of the liver transplant program at California Pacific Medical Center in San Francisco, served as lead investigator in the Phase II study with Viramidine.

"Simply put, I predict it [will be shown to have] equal efficacy to ribavirin, with less anemia," Gish told BioWorld Today, though he was traveling and had not seen the available Phase III results. "But the data will be out soon."

Company officials weren’t available to comment to BioWorld Today, but Timothy Tyson, president and CEO of Costa Mesa, Calif.-based Valeant, told investors during a conference call that he was "delighted" with the latest confirmation of Viramidine’s safety in results from VISER1, though he conceded the efficacy benefit was "somewhat less obvious."

Specifically, in the Viramidine (taribavirin hydrochloride) arm of the global study, only 38 percent of patients achieved a sustained virologic response (SVR), compared to 52 percent in the ribavirin control arm.

But anemia rates (Hgb less than 10g/dL) during the treatment period proved lower to a statistically significant degree in patients treated with Viramidine than those treated with ribavirin (5 percent vs. 24 percent, p=<0.0001).

Kim Lamon, Valeant’s chief scientific officer, said that results from North America and Europe look promising, while "data anomalies from investigator sites in the rest of the world regions clearly had an impact on the overall SVR rates in the study."

A total of 637 patients were enrolled in VISER1, with 489 in North America and Europe where, on a per protocol basis, the SVR rates for Viramidine were 51 percent vs. 56 percent for ribavirin. In these same regions, the SVR rates for patients weighing less than or equal to 75 kg were 62 percent for Viramidine vs. 60 percent for ribavirin.

In both of those analyses, SVR rates for oral Viramidine (administrated with a pegylated interferon) met the non-inferiority criteria.

What’s more, Tyson said, the data "clearly show a dose response based on weight, and that an increase in the dose on a mg-per-kg basis can achieve better efficacy outcomes without sacrificing the anemia benefit."

He called the results "very encouraging and provide us with enough information to show that Viramidine demonstrates superior safety and meaningful clinical efficacy. We will continue to move toward registration of the drug and launch in late 2007."

Full data from VISER1 will be presented at a scientific meeting in the first half of this year. VISER2 will be completed by the end of June, with results offered at a meeting at the end of this year or the start of next. The studies are identical, except that VISER1 used PEG-Intron, from Schering-Plough Corp., while VISER2 is using Pegasys, from F. Hoffmann-La Roche Ltd.

McDonald told BioWorld Today that Valeant, in the conference call Tuesday, was "trying to put a positive spin on what they have. Their Phase II data were terrible, and when I saw that, I knew the drug doesn’t work."

For the 135 patients treated in the Phase II trial with Viramidine plus Pegasys at doses of 400 mg, 600 mg or 800 mg, the overall response rate was 29.6 percent vs. a predicted rate of 29.8 percent for Pegasys alone.

Researchers probably were misled by what seemed to be positive results in the Phase II study’s 600-mg cohort, said McDonald, who has done "very focused work" in HCV and knows the space well. A response rate of 37 percent with Viramidine did not take into account the fewer number of high viral load patients in the small sample, he said.