Pharmasset share price gets a boost after 100-percent cure rate in HCV trial

Company’s Phase II trial for PSI- 7977 drug reportedly shows all study participants being cured of hepatitis C (HCV), with no reports of significant adverse events

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PRINCETON, N.J.—Nov. 6 saw the announcement by PharmassetInc. that its experimental drug PSI- 7977 demonstrated a cure rate of 100percent among hepatitis C patients in the company's Phase II study of thecompound. That shot the company's stock prices up by more than 8 percent atsome points over the next day, at one point climbing as high as $74.45, thoughshares closed closer to $72 by the end of trading on Nov. 7. By Nov. 8, theyhad dropped back to around $69, comparable to the price prior to theannouncement.
Overall, Pharmasset's shares have shown an upwardtrend in the past 12 months, rising from around $20 last November, reaching the30s by March 2011, hitting the 50s in April and remaining mostly between $60and $80 since June.
Presenting its data at the annual meeting of theAmerican Association for the Study of Liver Diseases in San Francisco, thecompany reported that all 40 patients who received PSI- 7977 drug in theELECTRON study were responsive after 12 weeks, about half the patients had beenfollowed up to 24 weeks, and they were all cured of their HCV infection—with nosignificant adverse events. 
Notable was the group of 10 patients with genotype2/3 HCV who received a 12-week course of the nucleotide analog PSI-7977combined with ribavirin but without pegylated interferon. The other threegroups took PSI-7977 plus ribavirin with either four, eight or 12 weeks ofpegylated interferon as well, according to Dr. Edward Gane, of the AucklandCity 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 interferonplus ribavirin resulted in sustained virologic responses in 96 percent of studyvolunteers with HCV genotype 2/3 and 91 percent of those with HCV genotype 1—themost common type of the infection in the United States and the hardest totreat.
Gane says that no "rescue" therapy was necessaryfor the patients and that at virtually all study time points—weeks four, eightand 12 during therapy and weeks four, eight, 12 and 24 after completion oftreatment—100 percent of the patients in each group maintained undetectable HCVviral loads. He also notes that HCV viral load suppression was rapid in allfour treatment groups and that study participants were at HCV levels below thelevel of detection within three weeks of starting treatment.
Another good sign from the study, Gane says, isthat all patients experienced a rapid normalization of key liver enzyme ALT—thepatients who didn't receive interferon gained this positive sign by the end ofthe third week of treatment.
Headache, fatigue, depression, insomnia, anxiety,irritability, muscle soreness and upper respiratory tract infections were sideeffects more likely to be documented in patients who were part of the 12-weekpegylated interferon group (72 percent), compared with those who didn't receiveany pegylated interferon (40 percent). Some 70 percent of those in the 12-weekpegylated interferon group experienced moderate-to-severe drops in neutrophils,though no one in the interferon-free PSI-7977/ribavirin group experienced thistoxicity. In addition, PSI-7977 plus ribavirin without interferon also had muchless effect on hemoglobin levels, a marker of anemia.
Commenting on the 400 milligram, once-daily doseof the drug, Gane says, "PSI-7977 remains very well tolerated with noattributable safety signal, no treatment discontinuations and no treatmentemergency laboratory abnormalities."
"Although patient numbers are small, we believethe results are extremely impressive," analyst Brian Abrahams of Wells FargoSecurities wrote in a note to investors Nov. 7.
Responding to the study results at the AmericanAssociation for the Study of Liver Diseases meeting, analysts at Brean MurrayCarret issued a statement that "We believe this validates the company'sdecision to move into Phase III program with this [drug] combination andsupports a new front line standard of care in these patients. Given thesubstantially better safety profile, we believe it will be unethical to useinterferon 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 "anadvance signal of strong proof of concept from the ELECTRON trial, and lending support to our thesis that nucs suchas 7977 will represent the backbone of an interferon-free future for HCVtherapy." He currently holds a "buy" rating on the company and a price target of $92. 
However, had a different view onNov. 8, when Pharmasset's share prices dropped back into the 60s, ratingPharmasset as a "Sell" and maintaining that "The company's weaknesses can be seen inmultiple areas, such as its deteriorating net income, weak operating cash flowand feeble growth in its earnings per share."

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