(Bloomberg Opinion) -- It’s good to come in first in drug development, though it’s not always a guarantee of long-term commercial success.
Short market monopolies can be highly lucrative. Investors are rewarding Intercept Pharmaceuticals Inc. on that basis. The New York-based drugmaker announced Tuesday that its medicine Ocaliva is the first to succeed in a final stage trial for nonalcoholic steatohepatitis (NASH), a liver disease that many drugmakers are targeting for potentially lucrative treatments. Intercept’s shares are up more than 10 percent in early trading.
The drug may be the only available treatment for NASH for more than a year if it wins FDA approval. But this may be a case where being first doesn’t translate into lasting advantage. Intercept’s drug has side effects, and NASH is shaping up to be an especially tricky market.
Intercept’s drug was tested at two different dosages and on two different outcomes, improvement in NASH and reduction in liver scarring (fibrosis). It succeeded only in its higher dose, which comes with a significantly greater likelihood of serious itching, and only on the reduction in scarring. Though it succeeded statistically on fibrosis, the impact was lower than in an earlier trial and less than some analysts expected.
It still may be enough to gain approval for NASH. Ocaliva is already approved to treat another liver condition, and the FDA is likely to be flexible because there aren’t any current options. Improving liver scarring is a real achievement, and patients with severe NASH can develop liver cancer or require a transplant.
But many NASH patients have no symptoms, and the disease improves spontaneously for some and with diet and exercise for others. Those disease dynamics — the lack of knockout efficacy and the side effects — may make Ocaliva a tough medicine to sell.
That risk may be compounded by looming competition. While there’s no guarantee they’ll succeed — a final stage trial for a drug developed by Gilead Sciences Inc. failed just last week — so many firms are taking such a variety of approaches that physicians and patients may be inclined to wait and see.
Vertex Pharmaceutical Inc.’s Incivek, another liver medicine, provides a cautionary tale. The drug, introduced in 2011, was the first of a new generation of Hepatitis C medicines, and initial sales were robust. But a competing drug began to show signs of better efficacy and fewer side effects in a trial just months into Incivek’s introduction.
Gilead Sciences Inc. acquired the competing medicine, and some patients delayed treatment because Hepatitis C is slow to progress. Gilead’s medicine was approved in late 2013, and Vertex eventually stopped selling Incivek.
Intercept’s trial success is an impressive step forward in a tricky disease. It will most likely reap at least some benefit from its head start. But the door is wide open for other firms to spoil the party.
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Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.
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