Can Daklinza profit from a set of niche hep C uses? BMS may soon find out

Gilead ($GILD) and AbbVie ($ABBV) may be dominating the hep C field with their next-gen combo treatments, but that doesn't mean there's no room for other companies to sneak in.

Bristol-Myers Squibb ($BMY), for one, is preparing to do just that with Daklinza, a med that Tuesday nabbed the FDA's priority review tag for a trio of new indications in hard-to-treat patients. Regulators will examine the med for use with Gilead's Sovaldi in those who are coinfected with HIV-1, suffering from advanced cirrhosis, or experiencing recurrence of hep C after a liver transplant.

And Bristol has some experience in that department. In July, it won FDA approval for use alongside Sovaldi in patients with difficult-to-treat hep C genotype 3. It also snagged a breakthrough designation from the FDA in May for treating genotype 1 patients with advanced cirrhosis.

Douglas Manion

"Hepatitis C is not a one-size-fits-all, monolithic disease," Douglas Manion, BMS' head of specialty development, said in a statement. "Our focus for the Daklinza-sofosbuvir regimen centers on addressing the needs of HCV patient subpopulations who need new options even in light of the extraordinary advances that have occurred in HCV treatment."

In other words, Bristol is targeting populations where Gilead's giant Harvoni--which pairs Sovaldi with ledipasvir--isn't already gobbling up market share. Since winning FDA approval last October, Gilead's behemoth--green-lighted for patients with genotype 1--has gone on to surpass the launch records Sovaldi itself set, raking in $2.1 billion in sales in its first quarter on the market.

That's a strategy Merck & Co. ($MRK) is eyeing for its own forthcoming combo treatment. Instead of undercutting its competitors and escalating the pricing war that PBM Express Scripts ($ESRX) ignited between Gilead and rival AbbVie, the New Jersey pharma giant plans to zero in on hard-to-treat patients. It may focus on treating genotype 4, for example, Bloomberg reported in August; that's a subtype that accounts for only 1% to 2% of U.S. cases, but currently, patients treated with Sovaldi also need to take a side effect-heavy companion.

And the way Yale professor and game theory expert Barry Nalebuff sees it, that's a good idea. "If you're small, a large player doesn't want to come down and swat you because it hurts them in the process," he told Bernstein analyst Geoffrey Porges in June. Instead, Nalebuff recommended Merck find a niche market it could approach that wouldn't make it "worthwhile for Gilead to come after them."

- read Bristol's release

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