In a surprise move, Bristol-Myers drops U.S. approval plans for hep C combo

Bristol-Myers Squibb ($BMY) is pulling out of one key race in the global scramble to develop new blockbuster hepatitis C cocktails. After sizing up the "rapidly evolving" competitive landscape as rival Gilead ($GILD) races ahead with a new combo treatment, Bristol-Myers has opted to drop its application to gain an approval in the U.S. for asunaprevir, its NS3/4A protease inhibitor, and won't go after an OK to use a combination of daclatasvir and asunaprevir for genotype 1b patients.

Bristol-Myers--which fell behind Gilead's Sovaldi early on--had pursued an international development program for asunaprevir, with a close eye on markets like Japan which have large populations of genotype 1b patients. The company won a landmark approval for the combo in Japan back in July, ushering in a new interferon-free regimen that is helping to rewrite the standard of care in the field.

But it won't play in the U.S., where Bristol-Myers is continuing to work on expanding the market for daclatasvir, an NS5A inhibitor marketed as Daklinza. Today's news looked like weakness to investors, though, with shares of Bristol-Myers sinking close to 2% in early trading.

Bristol-Myers was dealt a major blow when its nucleotide polymerase inhibitor--or "nuc"--blew up in the clinic a couple of years ago. Some analysts believe that Bristol-Myers badly needs to buy a nuc to be competitive in the market, following a string of deals by Merck and others. BMS has been collaborating with Vertex on its nuc, VX-135, but the Boston-based biotech said last May that it plans to outlicense the drug and drop all its next-gen work in the hep C field.

Gilead, meanwhile, is closing in on an approval for a combination of Sovaldi (an NS5B blocker) and ledipasvir, its NS5A inhibitor. AbbVie ($ABBV) and Merck ($MRK), meanwhile, have been working hard to close the gap with late-stage cocktails of their own that promise to further disrupt a market that has stunned payers with the introductory price of $84,000 for Sovaldi. That's a race that is squeezing out Bristol-Myers from the world's biggest drug market. In a note to investors Tuesday morning, ISI analyst Mark Schoenebaum wrote that Bristol-Myers' combo was looking weak compared to new cocktails from Gilead and AbbVie.

"We believe revenue expectations for this 2-drug combination in the US were reasonably low given the lower efficacy relative to other regimens from GILD and ABBV that are awaiting approval later this year," noted Schoenebaum. The key now for Bristol-Myers is a three-drug regimen that combines daclatasvir, asunaprevir and BMS-791325, which may be on track to an approval in the U.S. in 2015.

"We plan to submit additional data for daclatasvir to the FDA from our ongoing clinical trial program focused on difficult-to-treat patients, including patients with HCV genotype 3, patients who are pre- and post-liver transplant, and patients co-infected with HIV," the company said in a statement. "Next month at the annual meeting of The American Association for the Study of Liver Diseases, we will present new data from several daclatasvir-based regimens."

- here's the release

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