The developing hot therapeutic zone of hepatitis C virus generated encouraging news, though Wall Street proved lukewarm when Human Genome Sciences Inc. offered interim Phase II data showing Albuferon (albumin-interferon alpha 2b), given with ribavirin every other week, at 12 weeks worked as well as market leader Pegasys (pegylated interferon alfa-2a) from F. Hoffmann-La Roche Ltd.

Investors apparently didn’t like Albuferon’s once-monthly results, which fell below those with Pegasys, and HGS’ stock took a 20 percent hit. Frank DiLorenzo, with Standard & Poor’s - who upgraded HGS from a "hold" to a "buy" and raised the target price by a dollar to $16 - said the company "has had a string of disappointing news for their drug development over time."

The drop in share price, DiLorenzo told BioWorld Financial Watch, "is probably part of the situation here. People are throwing in the towel and saying, ‘It’s happening again.’ "

DiLorenzo didn’t think so. Neither did Thomas Watkins, CEO of the company, who told listeners in a conference call regarding the data that a Phase III trial - intended to prove a better dosing schedule with similar efficacy for the HGS drug - could begin later this year.

HGS provided an early peek at results from two Phase II trials. One, officially classed as Phase IIb, enrolled 458 patients and tested Albuferon with ribavirin in those with chronic HCV who are na ve to interferon alpha-based treatment regimens. The second, classed as a Phase II trial, used the two drugs in previously treated patients with chronic HCV.

In the first experiment, patients got either Albuferon in a 900-microgram dose every 14 days, a 1,200-microgram dose on the same schedule, or a 1,200-microgram dose every 28 days. Patients in the Pegasys group were given the drug at a 180-microgram dose every seven days. The primary endpoint is sustained virologic response (SVR), defined as undetectable virus 24 weeks after completion of 48 weeks of treatment.

Albuferon knocked the virus to below quantifiable levels in 75 percent of patients in the higher, 14-day dose group, in 69 percent of the 900-microgram 14-day dose group, and in 53 percent of the patients in the group given 1,200 micrograms every 28 days.

Sixty-six percent of the Pegasys group saw their virus dip below measurable levels.

The study of treatment-experienced patients resulted in 30 percent of those taking Albuferon showing undetectable HCV levels after 48 weeks of treatment. Eighteen percent showed the same, 12 weeks after treatment stopped.

That Phase II study design requires that about half of the subjects enrolled should be patients who have failed combination therapy that included Pegasys plus ribavirin. A total of 115 patients have been enrolled into five Albuferon treatment groups, with a primary endpoint of SVR - undetectable virus 24 weeks after the end of therapy.

HGS said the data support going ahead with treatment of Albuferon every 28 days at higher levels, and the full Phase IIb, 12-week data will be presented in late April at the meeting of the European Association for the Study of the Liver in Vienna, Austria.

"We’re assuming they’re going to partner the drug," DiLorenzo said, pointing to stiff competition not only from Roche but from Schering-Plough Corp., which introduced its Intron A (interferon alpha-2b) in 1991. Ribavirin, typically used with interferons, came along in 1998, and pegylated versions followed - Schering-Plough’s PEGIntron in 2001 and the market-transforming Pegasys from Roche the following year.

Barry Labinger, chief commercial officer of HGS, said, "Sometime between now and the start of Phase III would be a natural point to make a decision whether or not to partner," and he said some had "expressed very strong interest. We certainly think [Albuferon] is good enough to keep on our own. Does that mean we will keep it on our own? No, it doesn’t."

Said Watkins, "We will not partner this compound for economics alone. We have the wherewithal to take this compound forward into Phase III [and] complete a Phase III." He said HGS might make a deal "if we can find a potential partner that shares the same vision for this compound’s ultimate potential that we have, which is very high. We don’t have to."

Questioned about spending, Watkins said the "burn rate going forward is something we’ll have to look at in the context of a number of factors, including moving this product and Lymphostat-B forward. I don’t think you can conclude that because our burn rate is at a certain point now that automatically we can’t move [Albuferon] forward ourselves."

LymphoStat-B (belimumab) in October missed its overall primary efficacy endpoint of reducing the signs and symptoms at week 24 as measured by the Safety of Estrogens in Lupus Erythematosus National Assessment Systemic Lupus Erythematosus Disease Activity Index, known as SELENA SLEDAI. An antibody designed to inhibit the biological activity of B-lymphocyte stimulator, LymphoStat-B also missed the primary endpoint of increasing the time to first lupus flare over a 52-week period.

In seropositive patients, however - those with lupus in their blood, a subgroup that made up 75 percent of the trial population - the drug reduced the signs and symptoms at week 52 at a level of statistical significance as measured by SELENA SLEDAI (p=0.021) and by the Physician’s Global Disease Assessment (p=0.016).

"They have the right strategy [now], to focus only on seropositive patients," DiLorenzo said. But last week, the spotlight shone on HCV, an indication in which much of the attention has gone to Vertex Pharmaceuticals Inc. and its protease inhibitor, VX-950. (See BioWorld Financial Watch, Aug. 15, 2005.)

In early February, Vertex reported HCV loads dropped to undetectable levels in all patients given the drug in a Phase II trial for about a month. Andrew McDonald, analyst with ThinkEquity Partners, called the data "phenomenal" and "astounding" at the time, and in a research report last week referred to them as "legendary."

Schering-Plough has a protease inhibitor, too - SCH7 - which McDonald has estimated is about six months ahead of VX-950, though Vertex could close the gap. The combination of interferon plus protease inhibitors could be "remarkably synergistic," McDonald said.

Where does HGS stand in the interferon lineup, then? With a launch of Albuferon estimated about six months after the first protease inhibitors, "a third entrant into the interferon market could easily result in a pricing war between the therapies," McDonald wrote. "If Roche and Schering-Plough did indeed choose to double the prices of their interferon offerings, Human Genome Sciences would easily capture the lion’s share of the market by simply introducing their product at the same price."

Since Albuferon "will be an arguably better treatment with dosing only every two or four weeks, physicians and patients would likely abandon Pegasys and PEG-Intron" in favor of it, he predicted.

DiLorenzo found even more going for HGS, stock volatility or no.

"There was a situation early this year, where it was down and then up," he said. The partnership with GlaxoSmithKline plc "has been making some progress, and at this point [GSK] has four or five different compounds derived from HGS in their pipeline" - compounds that could provide respectable royalties down the road.

In January of this year, HGS got a $5 million payment from GSK after the London pharmaceutical firm filed an investigational new drug application to begin Phase I trials of GSK716155 for diabetes. The payment stems from a 2-year-old agreement that gave GSK exclusive worldwide rights to develop and commercialize the product, which was previously called Albugon, for all indications. Last July, GSK exercised its option to develop and commercialize LymphoStat-B for rheumatoid arthritis and lupus.

For investors not averse to risk, DiLorenzo said, HGS is still an interesting study. "Obviously, it’s a waiting game," he said.