For biotechs, no easy task
Hepatitis C, a serious medical problem around the world, is also one of the most important disease targets for the state’s biotechnology industry.
Very different results from unrelated clinical trials for Hepatitis C treatments reported this week by two Cambridge companies — Vertex Pharmaceuticals Inc. and Idenix Pharmaceuticals Inc. — say a lot about biotechnology’s ability to engineer cures and how investors value those efforts. The cures don’t come easily. Investors can be irrational.
The development of promising new treatments for hepatitis C are closely followed because they present a rare medical and commercial opportunity. As many as 3 million people in the United States alone suffer from the virus, but current treatments take a year, come with debilitating side effects, and fail half of the time. A new generation of drugs has the real potential to offer dramatic medical improvements to millions of people, a legitimate biotech breakthrough.
Vertex is the clear leader among biotechs developing those treatments. The company has been testing its Telaprevir drug for years and expects to finally ask regulators for approval in the last quarter of this year. Telaprevir has been shown to work in half the time as current treatments and succeed in 80 percent of cases.
The latest clinical results, announced this week, were nothing but good news. In a nutshell: Telaprevir worked exceptionally well on patients who were the hardest to cure.
Investors embraced this news by doing nothing. Vertex shares wobbled around. Two stock analysts cut their rating on Vertex.
The problem: inflated expectations ever since Telaprevir first showed real promise in 2005. Back then, the stock climbed from about $10 to over $44 in under a year. Vertex shares closed at $35.89 yesterday.
“What worries me are these high expectations around the [product] launch,’’ says analyst Alan Carr of Needham & Co., who downgraded Vertex to a “hold’’ this week. “When you have such high expectations, they can be tough to meet or beat.’’
Idenix, a much smaller company, is in the early stages of testing several treatments for hepatitis C. It gave two of them in combination to 16 healthy volunteers and discovered three developed apparently temporary liver problems and stopped the test.
That was certainly bad news but not the kiss of death for either drug, particularly since in another test Idenix has administered one of the treatments by itself to 81 patients without similar problems.
But the stock market cut the value of Idenix by 47 percent on the news Tuesday, just days after the shares hit a 52-week high. “Drug development is a difficult business,’’ says Ron Renaud, the chief financial officer at Idenix.
That’s the understatement of the day.
The Red Herring
■ Lawyers, lawyers everywhere: Genzyme Corp. of Cambridge, currently giving the cold shoulder to takeover suitor Sanofi-Aventis SA, is the defendant in at least two new lawsuits by shareholders arguing the company should negotiate. Cases seeking class-action status were filed in US District Court in Boston and Middlesex Superior Court this week. Last month, another shareholder sued Genzyme alleging the company was imprudently rushing into Sanofi’s arms. A Genzyme spokesman declined to comment.
■ Watch out for Shamu: David D’Alessandro is becoming the nonexecutive chairman of SeaWorld Parks & Entertainment. D’Alessandro is the former chief executive of John Hancock Financial Services Inc. SeaWorld, owned by Blackstone Group, operates 10 theme parks including three SeaWorld locations and two Busch Gardens.
Steven Syre is a Globe columnist. He can be reached at syre@globe.com. 
