Drugmakers Race for Hepatitis C Cure

10/18/2012 9:56 am EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

There's an extra billion or two in annual sales for the company that can get to market first, writes MoneyShow's Jim Jubak, also of Jubak's Picks.

We got a lot of news in the hepatitis C space Monday, October 15, out of the meeting of the American Association for the Study of Liver Diseases.

And big positive news came from both Abbott Laboratories (ABT) and Bristol–Myers Squibb (BMY). Both stocks are members of my Jubak’s Picks portfolio.

Abbott announced that a test group that took a two– or three–drug mixture of Abbott drugs along with the antiviral ribavirin showed that the combination wiped out all traces of the hepatitis virus in 99% of patients with the liver disease.

Bristol–Myers, which is another company racing to develop a replacement to the standard yearlong injection treatment, reported that its triple combination therapy of NS5A daclatasvir, protease inhibitor, and non–nuc NS5B showed a 94% early cure rate for patients with the hepatitis virus.

While these results show that Bristol–Myers still lags the leaders—Abbott and Gilead Sciences (GILD)—the report does put Bristol–Myers back into the competition. That’s major good news for the stock, because Wall Street had pretty much written off Bristol–Myers’ prospects in the hepatitis C market after it ended testing of its main drug candidate BMS–094 on worrying safety data.

Gilead is currently conducting an 800–person trial (versus Abbott’s 571–patient trial) of a therapy that requires fewer pills than Abbott’s. So Wall Street still thinks this race is Gilead’s to lose.

Credit Suisse, for example, forecasts that Gilead will have $3.8 billion in hepatitis C drug sales in 2020, to $2.5 billion at Abbott and $1.3 billion at Bristol–Myers. And there’s no doubt that Gilead’s approach has an edge, since it doesn’t user ribavirin, which doctors would prefer not to use.

But these results do show that the hepatitis C market is still a horse race. Other “horses” in the race include Vertex Pharmaceuticals (VRTX) and Achillion Pharmaceuticals (ACHN).

(Abbott Laboratories was briefly above my target price on October 16, but the company’s earnings report knocked the stock back down. I’ll have an update with a new target price tomorrow.)

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund, may or may not now own positions in any stock mentioned in this post. For a full list of the stocks in the fund as of the end of June, see the fund’s portfolio here.

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