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4 Drug Stocks in Focus this World Hepatitis Day

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Every year on Jul 28, World Hepatitis Day (WHD) is observed to raise awareness about viral hepatitis, one of the leading causes of death across the world.

According to the World Health Organization (WHO), viral hepatitis caused 1.34 million deaths across the world in 2015 and many people remain unaware of being infected by the same. While there are five types of hepatitis (A, B, C, D and E), hepatitis B and C are the two main killers with 257 million people living with hepatitis B and 71 million people living with hepatitis C.

About 90% of people living with hepatitis B and 80% living with hepatitis C are unaware of their status. Hepatitis B and C together account for 80% of liver cancer cases across the world.

Considering these numbers, it is not a surprise that quite a few pharma and biotech companies are working on bringing innovative treatments in this area to the market. However, challenges in the hepatitis C virus (HCV) market exist in the form of intense competition and pricing pressure.  

Stocks in Focus

Here is a look at some of the key players in the hepatitis B and/or C markets.

Biotech major, Gilead Sciences, Inc. (GILD - Free Report) is perhaps the most well-known name in the HCV market. HCV drugs include Harvoni, Sovaldi, Epclusa and the recently approved Vosevi while HBV offerings include Viread and Vemlidy.

However, the Foster City, CA-based company has seen a lot of ups and downs in this market. Gilead’s HCV franchise was a major revenue contributor bringing in multi-billion dollar sales but increasing competition and pricing pressure resulted in a significant decline in HCV product sales in 2016. Even though Gilead recently raised its 2017 guidance for its HCV franchise, sales are nevertheless expected to witness a significant decline.  

Gilead launched an educational campaign in 2016 to encourage baby boomers to get tested. According to the company, there has been an 80% increase in HCV antibody screening by baby boomers since the campaign started resulting in an increase in diagnosis as well. The company estimates that about 190,000 people were newly diagnosed with HCV in 2016, up 32% from 2015.

Gilead is conducting additional studies on Harvoni as well as Vemlidy and has an early-stage HBV candidate in its pipeline (GS-9688, a TLR-8 agonist). Gilead is a Zacks Rank #2 (Buy) stock. Year-to-date (YTD), the company’s stock is up 4.7%, lagging the 10% rally of the industry it belongs to. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Large-cap pharma company, Merck & Co., Inc. (MRK - Free Report) , is another big name in the HCV market. According to information provided by Merck, about 3.5 million people in the U.S. have chronic HCV infection. Merck’s HCV portfolio comprises Zepatier, which was launched last year, PegIntron and Victrelis. However, the company’s HCV franchise is not a major revenue generator. Earlier this year, Merck took a major impairment charge related to an HCV candidate that became a part of its pipeline following the 2014 acquisition of Idenix. The decision was taken based on changes to the product profile, as well as changes to the company’s expectations for pricing and the market opportunity. Merck is a Zacks Rank #2 stock. YTD, the company’s stock is up 8.2%, lagging the 10.7% rally of the industry it belongs to.

AbbVie Inc. (ABBV - Free Report) also has a major presence in the HCV market. The company’s HCV products include Viekira Pak and Technivie. AbbVie is currently seeking approval for Maviret, an investigational, pan-genotypic regimen of glecaprevir/pibrentasvir (G/P). The once-daily ribavirin-free treatment has the potential to provide a faster path to virologic cure for all major HCV genotypes (GT1-6). Maviret represents blockbuster potential and could help AbbVie gain major market share once approved and launched.

AbbVie is a Zacks Rank #3 (Hold) stock. AbbVie stock has gained 14.6% YTD, performing better than the industry it belongs to.

Watertown, MA-based Enanta Pharmaceuticals, Inc. (ENTA - Free Report) has a collaboration with AbbVie for its protease inhibitors – paritaprevir and glecaprevir. While paritaprevir is a key compound in AbbVie’s direct-acting-antiviral (DAA) regimen Viekira Pak and its other 3-DAA and 2-DAA treatment regimens currently on the market for HCV, glecaprevir in combination with pibrentasvir (G/P, Maviret) is currently under regulatory review. Enanta earns royalties from AbbVie on product sales. Meanwhile, Enanta is also working on developing its HBV pipeline -- the focus is currently on core inhibitors with clinical candidate identification planned for 2017.

Enanta is a Zacks Rank #3 stock. YTD, Enanta stock has gained 13.6%, outperforming the 5.5% rally of the industry it belongs to.

Bottom Line

The HCV market will continue to face challenges as more treatments enter the market resulting in increased competition and additional pricing pressure. In fact, HCV drugs have faced immense scrutiny due to their high prices. That said, the market nevertheless represents significant commercial opportunity. As per information provided by Enanta, the market for HCV therapies was worth about $16 billion in 2016. HCV patient starts usually witness a surge following the introduction of new drugs in the market. With a major part of HCV-infected people remaining undiagnosed, there remains significant opportunity in this market as awareness increases and newly diagnosed patients seek treatment.

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