Too Little, Too Late for Achillion?

Achillion Pharmaceuticals (NAS: ACHN) presented great data for its hepatitis C protease inhibitor drug ACH-2684 -- and was well rewarded with an 11% jump in its stock price yesterday -- but one has to wonder if it's too little, too late.

This was just phase 1b data, after all.

In a short trial designed to check the activity of ACH-2684, three days of daily dosing produced a 3.73 log10 reduction in virus levels. The placebo barely moved the log scale with a 0.68 log10 decline. A twice-daily dose produced a larger decline in virus levels, but probably not enough to justify using it in later clinical trials given that once-daily treatment is more convenient.

The first drugs to improve hepatitis C treatment beyond the old standby of ribavirin and peginterferon were both protease inhibitors: Merck's (NYS: MRK) Victrelis and Vertex Pharmaceuticals' (NAS: VRTX) Incivek. ACH-2684 is a second-generation protease inhibitor, hoping to improve on the first-generation inhibitors through tighter binding.

There's more than one way to kill a virus, though. Since Victrelis and Incivek were approved last year, protease inhibitors have fallen out of favor, with Gilead Sciences' (NAS: GILD) nucleotide inhibitor GS-7977 and Bristol-Myers Squibb's (NYS: BMY) NS5A inhibitor daclatasvir demonstrating great results without the need for a protease inhibitor (nor ribavirin and peginterferon).

If ACH-2684 were further along, perhaps Gilead or Bristol might be willing to test it in combination with their drugs, but both are close to entering phase 3 and have other molecules they can combine together if they want to go it alone. They're certainly not going to wait around for a drug still working out its proper dosing.

I'm not suggesting that Achillion should just shelve ACH-2684, though. Achillion has other hepatitis C drugs in its pipeline, so a partner isn't necessary to push its protease inhibitor along. And the higher potency could make it effective against viruses that have developed mutations that make them resistant to other drugs. Coming up from behind, ACH-2684 might end up doing mop-up duty for patients that fail other treatments. There wouldn't be as many potential patients, but perhaps the drug could be priced at a premium to make up for it.

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At the time this article was published Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Gilead Sciences and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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