Vertex Pharmaceuticals Incorporated / Alios BioPharma, Inc.

Chronic Hepatitis C Virus (HCV) Infection

Disease Overview

Chronic hepatitis C is a blood-borne liver infection caused by the HCV virus that, untreated, progresses to cirrhosis, liver failure, and hepatocellular carcinoma. In 2011, the standard of care was a poorly tolerated peg-interferon/ribavirin backbone with cure rates around 40-50%, leaving millions of US patients with limited options and driving an industry-wide race for an all-oral, interferon-free regimen.

Competitive Landscape

In June 2011 the HCV space was dominated by two newly approved protease inhibitors — Vertex/Janssen's Incivek (telaprevir) and Merck's Victrelis (boceprevir) — both add-ons to peg-interferon/ribavirin with toxicity and resistance liabilities. The strategic prize, however, was the next wave: nucleotide NS5B polymerase inhibitors with pan-genotypic activity and high resistance barriers. Pharmasset's PSI-7977 (later sofosbuvir/Sovaldi) was leading that race and would be acquired by Gilead for ~$11B just months later in November 2011. Vertex licensed Alios's ALS-2200/VX-135 and ALS-2158 in this deal precisely to plant a flag in the nuc class and defend the franchise it had built around Incivek. The bet failed: Sovaldi's December 2013 approval crushed Incivek (sales fell 96% YoY), and after a partial FDA hold on VX-135 for liver enzyme elevations, Vertex exited HCV entirely in 2014, out-licensing VX-135 and writing off the program — a textbook example of a defensive licensing deal overrun by a superior competitor asset. (Sources: news.vrtx.com 2011-06-08; biopharmadive.com 2014-08-13.)