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Bristol-Myers Squibb Company (BMY - Analyst Report) received encouraging news when the Japanese Ministry of Health, Labour and Welfare (MHLW) cleared its combination therapy of Daklinza (daclatasvir) and Sunvepra (asunaprevir) for treating patients suffering from the genotype 1 strain of chronic hepatitis C virus (HCV), including those affected by compensated cirrhosis. While Daklinza is a NS5A replication complex inhibitor, Sunvepra is a NS3/4A protease inhibitor.

Approval was gained on the basis of encouraging data from a phase III study which showed that the combination of Daklinza and Sunvepra achieved an overall sustained virologic response of 84.7% after 24 weeks of treatment in Japanese patients suffering from genotype 1b version of HCV. The patients were either ineligible for or intolerant to interferon therapy or non-responders to the same. Bristol-Myers had sought Japanese approval for the dual regimen late last year.

Bristol-Myers stated in its press release that this marked the first interferon-free and ribavirin-free therapy to be approved in Japan for treating HCV. The biopharmaceutical major further noted that interferon-based therapies are the current standard of care for treating HCV patients.

Gilead Sciences (GILD - Analyst Report) intends to seek Japanese approval of a fixed dose combination of ledipasvir and its highly successful HCV treatment Sovaldi in genotype 1 patients by year end.

The HCV market is highly lucrative worldwide. Japan particularly offers significant commercial potential making us highly bullish on the approval. As per Bristol-Myers, in Japan alone 1.2 million people are estimated to be affected by HCV. The company further stated that approximately 70% of the HCV affected population suffer from genotype 1b of the infection. Moreover, people aged over 65 years form a significant portion of the HCV affected population in Japan. It decreases the probability of elderly patients tolerating interferon-based medications, which are associated with serious side effects.

Bristol-Myers is looking to get Daklinza-based regimens approved in the U.S. (target date: Nov 30, 2014) and EU (under review) for treating HCV. We expect investor focus to remain on updates regarding the development of Bristol-Myers’ HCV pipeline.

Bristol-Myers carries a Zacks Rank #3 (Hold).  Better-ranked stocks in the healthcare sector include Actelion (ALIOF) and Biogen Idec (BIIB - Analyst Report). Both are Zacks Ranked #1 (Strong Buy) stocks.

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