Human Genome Sciences and its partner Novartis may need to take a long look at Zalbin's chances for approval and market potential in the quickly changing hepatitis C arena now that FDA has indicated the drug's benefit-to-risk ratio is insufficient for approval.

After receiving a "Discipline Review" letter from FDA regarding its BLA for Zalbin, HGS stated June 14 that it had concluded "licensure of this dosing regiment is unlikely." The company is seeking regulatory approval of the drug, a next-generation interferon, in a dosing regimen that consisted of 900 mcg every two weeks.

Novartis is co-developing the albumin-fused interferon for the EU market as Joulferon , but pulled its MAA in April after the European Medicines Agency expressed concerns similar to FDA's.

Novartis paid $45 million upfront in 2006 for co-development and commercialization rights to the compound based on the expectation that it would find a lucrative place in the HCV market as a replacement for two pegylated interferon products - Roche's Pegasys and Merck's Pegintron . Pegylated interferon and ribavirin currently comprise the standard of care in HCV, but they are dosed on a weekly basis. Interferons in general cause flu-like side effects in patients that last about two to three days, so an interferon that could be dosed less frequently would offer a meaningful safety benefit.

By being fused with human albumin, the most prevalent naturally occurring blood protein in the circulatory system, Zalbin has a longer half-life than Pegasys or Peginterferon, allowing less frequent dosing, according to Rockville, Md.-based HGS.

Non-Inferior But Not Superior To Market Standards

In a pair of head-to-head Phase III trials against Pegasys, Zalbin demonstrated non-inferiority for efficacy but did not show superior efficacy numerically (Also see "Albuferon ACHIEVE-1 Study Shows Non-Inferiority To Pegasys, But That Fails To Convince" - Pink Sheet, 9 March, 2009.). In genotype I HCV patients, Pegasys produced sustained viral response in 51 percent compared to 48.2 percent for Zalbin. In genotype 2 and 3 patients, Pegasys posted an SVR rate of 84.8 percent compared with 79.8 percent for the HGS/Novartis candidate.

Exacerbating the lack of superiority was the fact that the Zalbin arm in both trials had higher discontinuation rates. In addition, the data safety monitoring committee recommended that a biweekly dose of 1,200 mcg be reduced to 900 mcg because of pulmonary adverse events in that arm of the trial.

HGS and Novartis now are jointly testing three doses of Zalbin (1,500 mcg, 1,200 mcg and 900 mcg) given monthly compared to weekly Pegasys in 391 genotype 2/3 patients over a 24-week treatment period. In March, HGS announced interim results from that trial similar to the findings in the Phase III biweekly dosing trials. Zalbin produced a 12-week SVR rate of 81 percent compared to 82 percent for Pegasys. But the adverse-event and discontinuation rates again were higher among Zalbin recipients.

Analysts, who are uniformly bullish on HGS' other late-stage candidate, Benlysta (belimumab), are mixed on the potential value of Zalbin, with some not including it in their projections of the company's earnings per share. HGS filed for U.S. and EU approval of Benlysta last week in systemic lupus erythematosus,

Limited Window Of Opportunity For Zalbin

With the setbacks for the biweekly dosing regiment, ThinkEquity analyst Brian Skorney believes HGS and Novartis need to give serious thought to whether the Zalbin program is worth continued investment. When its chances for approval looked better, he estimated the drug only to increase earnings per share by about $0.70.

"I think Zalbin would have been a very good drug if it had been developed five or six years ago but with the changing paradigm [in hepatitis C], to me there's just too much risk to put a lot of value in," Skorney said in an interview.

Because of the anticipated near-term approval of direct-acting antivirals for HCV, likely to be led by Vertex's telaprevir and Merck's boceprevir, a pair of next-generation protease inhibitors, interferon may not remain part of the standard HCV regimen within 10 years, he said.

"So for Human Genome Sciences, I think it's a non-starter one way or the other. I think if the program disappeared today, it would not really impact the stock. And if they were able to get a surprise approval, I don't think it would move the stock up," he said.

"I don't think there's a very big window for making profit with this drug," Skorney said. If successful, the direct-acting antivirals likely will reduce the treatment period for HCV from 48 weeks to 24 or 28 weeks, dealing a blow to interferons' revenue-generating ability even while they remain part of the standard of care, he added.

"In five years, when we see several direct-acting antivirals used in tandem with each other ... we'll be able to shorten that window even further. Will it come down from 24 weeks to 12 weeks of therapy or even shorter than that?" Skorney asked. "Every step down you take in the number of weeks of therapy patients are getting, you also have to reduce the overall market size for interferons, because I doubt that there's going to be any significant premium pricing to account for the loss of treatment days."

In a June 14 note, however, Robert W. Baird analyst Christopher Raymond argued that Zalbin seemed to offer decent earning potential before this most recent setback. Consensus revenue estimates for Zalbin ranged between $200 million and $300 million in 2013, he wrote.

Raymond called the negative FDA opinion "not entirely expected," saying that he had anticipated early 2011 approval for Zalbin. "With the focus now fully on Benlysta and a strong launch already anticipated, we continue to see little room for error [by HGS]," he added.

HGS did not respond to a request to comment.

-Joseph Haas (j.haas@elsevier.com)

Monthly Or Bust: Zalbin's Chances For Approval Likely Rest On Monthly Use Data

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