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J&J, Ascletis among drugmakers racing to unlock China's hepatitis B market

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J&J, Ascletis among drugmakers racing to unlock China's hepatitis B market

Johnson & Johnson and Ascletis Pharma Inc. are among drugmakers racing to find a cure for hepatitis B and open a new market in China.

China has about 90 million chronic carriers of the infectious virus, accounting for one-third of that population worldwide, according to data compiled by the World Health Organization. There is no ultimate cure for the disease yet.

Unlike hepatitis A and hepatitis C viruses, hepatitis B virus hides deep in the nucleus of liver cells. The virus' DNA integrates with human DNA, which makes it hard to cure, said Yuen Man-fung, chair of gastroenterology and hepatology at the University of Hong Kong.

Current hepatitis B treatments either disrupt the virus's reproductive cycle or awaken the body's immune system. Drugmakers including New Brunswick, N.J.-based Johnson & Johnson and China's Ascletis are researching new approaches that suppress the virus or strengthen the body's natural defenses.

While some companies are conducting preliminary research to cure the disease with gene editing, the procedure is difficult and needs to be very precise, Yuen said.

Foster City, Calif.-based Gilead Sciences Inc., for example, said in 2018 that the company will use Precision BioSciences Inc.'s ARCUS gene editing platform to develop therapies for the disease.

Yuen said a lot of the carriers in China were infected before vaccines became available in the country. While the hepatitis B vaccine was approved in the U.S. in 1981, it was not available in China until 1992.

Thanks to better access to vaccines, the patient population has been shrinking in China in recent years, but despite these trends, drugmakers still see potential, according to Credit Suisse's head of China healthcare research Serena Shao.

"Just like hepatitis C drugs, you have one less patient to sell to once he is cured, so the life cycle for hepatitis B drugs is short. However, that's still enough to generate a moderate return," said Shao. "There are fewer drugs that can yield a promising return, so it's already a low-hanging fruit."

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Calling for a better drug

More than 90% of the hepatitis B patients in China are taking medicines that belong to a class of drugs known as nucleoside analogues, according to Wang Guiqiang, a professor at Peking

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University's Health Science Center. These drugs include Bristol-Myers Squibb Co.'s Baraclude, or entecavir, which suppresses the virus' DNA to inhibit an important step in the process of virus replication.

Other patients are on interferon, which activates the immune system and suppresses the virus's antigen, Wang said, citing the multi-targeting nature of interferon as one of the drug's benefits. Roche Holding AG's Pegasys, or peginterferon alfa-2, and Swedish Orphan Biovitrum AB (publ) Multiferon, or interferon alpha, and their copycats are the widely used interferons on the market.

However, only 30% of the patients on interferon and 95% on nucleoside analogues could achieve long-term viral suppression, which reduces their risks of getting liver cancer and cirrhosis, Yuen said. A functional cure, which occurs when patients' immune systems can adequately control the virus, can rarely be achieved by using these drugs, according to Yuen.

The virus will likely come back once the patient stops treatments, and because people can rarely tolerate interferon for more than one year due to the side effects, most patients ended up taking nucleoside analogues for life, according to Yuen.

That presents an opportunity for drugmakers to find a treatment to free patients from lifelong therapies.

Race to pick the low hanging fruit

Shao also said that like hepatitis C drugs, which unlocked a robust revenue stream for Gilead, hepatitis B therapy is also a "winner takes all" market.

"Multinational companies are leading but domestic pharmas are also catching up," said Zhang Jialin, a healthcare analyst at ICBC. Zhang said small companies may also come up with disruptive treatments for the disease, and if a cure is found, the current interferon and nucleoside analogues manufacturers will be hurt.

"The more advanced and aggressive investigative treatments now are siRNA and capsid inhibitors," said Yuen.

Johnson & Johnson is among companies that are looking into siRNA, or small interfering ribonucleic acid, treatment for the disease. The therapy, JNJ-3989, was licensed from Arrowhead Pharmaceuticals Inc. and is in phase 2 testing in the U.S. but has not yet been submitted for a clinical trial in China.

The siRNA treatment "is very effective; it suppresses the viral DNA, RNA and antigens, the three most common factors in the disease," said Yuen.

Besides siRNA, Johnson & Johnson is also testing a type of medicine known as a capsid inhibitor, and is leading the race in China with an affiliate research institution of YiChang HEC ChangJiang Pharmaceutical Co. Ltd. These drugs inhibit the core protein, interfering with the virus replication process in an effort to reduce virus DNA in liver cells.

The core protein "is the car that drives the virus' DNA into the nucleus" of the liver cells, said Yuen, adding that after the DNA arrives at the nucleus, it will convert into covalently closed circular DNA, or cccDNA, a viral template for replication.

Capsid inhibitors have shown an effect in suppressing the virus's DNA like nucleoside analogues, but more evidence is needed to prove its effect on reducing cccDNA before scientists can conclude it is a more effective drug, Yuen said. The affiliate research institution told S&P Global Market Intelligence that it also plans to research siRNA therapy.

Apart from capsid inhibitor and siRNA, companies are also exploring other directions to cure the disease. Ascletis, for example, is testing a PD-L1 class checkpoint inhibitor — an immunotherapy that is typically used to stimulate the body's immune system to fight cancer, through collaboration with Alphamab. The treatment, which has not been tested in any animal study, is slated to enter phase 2 in 2019.

"Hepatitis B virus exhausts the immune system, taking the weapons from T-cells, which are the warriors in the human body," Ascletis CEO Wu Jinzi told Market Intelligence. "Our drug aims to give the weapons back to them, so they can fight again."

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Combo is the future

Yuen, however, said he does not see an ultimate cure for hepatitis B ready for the market soon, due to the complexity of the disease.

"It would be good enough to have a better treatment to suppress the virus more so that the immune system can do the job," he said.

Yuen said that once there is more clarity about how the advanced therapies work and evidence to support their effectiveness, the next step will be looking at combinations for all patients or specific patient groups.

"Research on combo therapy is ongoing and I expect to see the results in the coming one to two years," Yuen said.