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Pharmasset share price gets a boost after 100-percent cure rate in HCV trial
by Jeffrey Bouley  |  Email the author


PRINCETON, N.J.—Nov. 6 saw the announcement by Pharmasset Inc. that its experimental drug PSI- 7977 demonstrated a cure rate of 100 percent among hepatitis C patients in the company's Phase II study of the compound. That shot the company's stock prices up by more than 8 percent at some points over the next day, at one point climbing as high as $74.45, though shares closed closer to $72 by the end of trading on Nov. 7. By Nov. 8, they had dropped back to around $69, comparable to the price prior to the announcement.  
Overall, Pharmasset's shares have shown an upward trend in the past 12 months, rising from around $20 last November, reaching the 30s by March 2011, hitting the 50s in April and remaining mostly between $60 and $80 since June.  
Presenting its data at the annual meeting of the American Association for the Study of Liver Diseases in San Francisco, the company reported that all 40 patients who received PSI- 7977 drug in the ELECTRON study were responsive after 12 weeks, about half the patients had been followed up to 24 weeks, and they were all cured of their HCV infection—with no significant adverse events.
Notable was the group of 10 patients with genotype 2/3 HCV who received a 12-week course of the nucleotide analog PSI-7977 combined with ribavirin but without pegylated interferon. The other three groups took PSI-7977 plus ribavirin with either four, eight or 12 weeks of pegylated interferon as well, according to Dr. Edward Gane, of the Auckland City Hospital in Auckland, New Zealand, and a member of the ELECTRON study team.
This is in line with earlier studies of PSI-7977, such as the PROTON study in which PSI-7977 combined with pegylated interferon plus ribavirin resulted in sustained virologic responses in 96 percent of study volunteers with HCV genotype 2/3 and 91 percent of those with HCV genotype 1—the most common type of the infection in the United States and the hardest to treat.  
Gane says that no "rescue" therapy was necessary for the patients and that at virtually all study time points—weeks four, eight and 12 during therapy and weeks four, eight, 12 and 24 after completion of treatment—100 percent of the patients in each group maintained undetectable HCV viral loads. He also notes that HCV viral load suppression was rapid in all four treatment groups and that study participants were at HCV levels below the level of detection within three weeks of starting treatment.  
Another good sign from the study, Gane says, is that all patients experienced a rapid normalization of key liver enzyme ALT—the patients who didn't receive interferon gained this positive sign by the end of the third week of treatment.  
Headache, fatigue, depression, insomnia, anxiety, irritability, muscle soreness and upper respiratory tract infections were side effects more likely to be documented in patients who were part of the 12-week pegylated interferon group (72 percent), compared with those who didn't receive any pegylated interferon (40 percent). Some 70 percent of those in the 12-week pegylated interferon group experienced moderate-to-severe drops in neutrophils, though no one in the interferon-free PSI-7977/ribavirin group experienced this toxicity. In addition, PSI-7977 plus ribavirin without interferon also had much less effect on hemoglobin levels, a marker of anemia.  
Commenting on the 400 milligram, once-daily dose of the drug, Gane says, "PSI-7977 remains very well tolerated with no attributable safety signal, no treatment discontinuations and no treatment emergency laboratory abnormalities."  
"Although patient numbers are small, we believe the results are extremely impressive," analyst Brian Abrahams of Wells Fargo Securities wrote in a note to investors Nov. 7.  
Responding to the study results at the American Association for the Study of Liver Diseases meeting, analysts at Brean Murray Carret issued a statement that "We believe this validates the company's decision to move into Phase III program with this [drug] combination and supports a new front line standard of care in these patients. Given the substantially better safety profile, we believe it will be unethical to use interferon in untreated Gt. 2/3 patients once PSI-7977 is approved."
Canaccord Genuity biotechnology analyst Dr. George Farmer is also bullish, claiming that this study provides "an advance signal of strong proof of concept from the ELECTRON trial, and lending support to our thesis that nucs such as 7977 will represent the backbone of an interferon-free future for HCV therapy." He currently holds a "buy" rating on the company and a price target of $92. 
However, had a different view on Nov. 8, when Pharmasset's share prices dropped back into the 60s, rating Pharmasset as a "Sell" and maintaining that "The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow and feeble growth in its earnings per share. "

Code: E11091101



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