The Hepatitis C Battle, Round II – Medivir (J&J) Vs Gilead And AbbVie

Posted: 13 October, 2014 in Published Investment Calls
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Despite the launch of the very profitable Hepatitic C drug  Olysio (Simeprevir) in collaboration with J&J (JNJ), the Medivir share (MVRB) is still extremely undervalued compared to most pharma- and biotech companies (October 12, 2014). However, compared to many other higher estimated biotechs and small pharma companies (P/E 10-25), Medivir is not a one hit wonder. Medivir (estimated P/E of ~2-3, 2014), has several attractive in‐house projects in the development phase as well as a number of earlier discovery projects. These factors, coupled with Medivir’s ambition to identify new business opportunities in the Nordic region, form the basis of the company´s ongoing efforts to develop Medivir towards sustainable profitability.

But, what´s the catch?

Well, the author (C.E.S.I.) struggles hard to find a catch.

Gilead´s (GILD) new combo Harvoni (Ledipasvir in combination with Sofosbuvir) was approved two days ago. However, the author concludes that Medivir and J&J might benefit from a Gilead (Sovaldi / Ledipasvir) 24 weeks treatment regime for cirrhosis patients. The current phase III Optimist studies (based on the phase II COSMO studies) will, if the expectations are met, deliver a 12 weeks treatment opportunity for the cirrhosis patients. Due to the 50% reduction of treatment time, the total treatment price should be substantially lower compared to the Sovaldi / Ledipasvir combo.

Likewise, the author would not be surprised if AbbVie (ABBV) will announce the prerequisite for a 24 weeks treatment regime. See the Credit Suisse comments below (next two links were provided the eminent Swedish Placera blogger Prisma)

Furthermore, J&J and Medivir will benefit from a speculative, but possible near future Sovaldi price reduction

Most importantly, analysts have to a large extent ignored the fact that Gilead Sciences and its fantastic, but too expensive “super drug” Sovaldi has had, and should have, continued “unexpected” competition from J&J (Janssen) and Medivir…

In fact, in many articles, the J&J contribution / competition is not even mentioned…

Not very surprisingly, the “gilead competitors hcv” google search top answers:

The first hit is a relevant hit: “Doctors welcome hepatitis C drug rivals, Gilead still leads”

Merck (MRK), AbbVie and Bristol-Myers Squibb (BMY) are highlighted. J&J (Janssen) / Simeprevir / Olysio / Medivir is not mentioned – despite the prior and current – 25-29% market share

The second hit is semi-relevant: “Express Scripts assembling anti-Sovaldi coalition to shut out Gilead hep C drug”

AbbVie and Bristol-Myers Squibb are highlighted. J&J (Janssen) / Simeprevir / Olysio / Medivir is not mentioned – despite the prior and current – 25-29% market share

The third hit is relevant: “Don’t worry about a hep C pricing war”, analysts tell Gilead-watchers

Merck, AbbVie and Bristol-Myers squibb are highlighted. J&J (Janssen) / Simeprevir / Olysio / Medivir is not mentioned – despite the prior and current – 25-29% market share

The fourth hit is sub-semi-relevant: “Gilead in 2013: AbbVie sought to eliminate competition and dominate market for HCV drugs” ( ) J&J (Janssen) / Simeprevir / Olysio / Medivir is not mentioned – despite the prior and current – 25-29% market share

The fifth hit is of very high quality and it is in fact a most relevant Seeking alpha hit: “Called Strike 3 For Bristol-Myers Squibb: What This Says For Gilead And Its Competitors In The Hep C Market”

J&J (Janssen) and Olysio are mentioned. Near future J&J concerns are also appropriately addressed.

The sixth hit is a relevant and also a high quality hit by The New York Times: Harvoni, a Hepatitis C Drug From Gilead, Wins F.D.A. Approval. Herein, J&J is also mentioned and the message is relevant. The US J&J market share finally should decrease (at least temporarily…)

“In practice, many doctors this year have been avoiding the use of interferon by prescribing Sovaldi with another new pill, Johnson & Johnson’s Olysio. That combination has not been approved by the F.D.A. and costs about $150,000.

Compared with that off-label combination, Harvoni is far less expensive, which could mean lower sales for Johnson & Johnson’s drug.

It is not so much the price per patient of Sovaldi but the total cost that has insurers and Medicaid programs worried. Sales of Sovaldi in the first half of the year were nearly $6 billion, almost all of it in the United States, shattering the record for first-year sales of any drug.”

Sales of Sovaldi in the first half of the year were nearly $6 billion, almost all of it in the United States, shattering the record for first-year sales of any drug.”

However, in the first C.E.S.I. article linked below, the author claims that HCV disease will most likely also continue to involve Interferon treatments.


It  seems that US analysts neglect to take the non-insured patient community into consideration. Medicaid, prisons and veterans´ organizations are price sensitive. Analysts seem to have missed the fact that the new generation HCV drugs are so expensive for the community that the price will become a more important factor than convenience in drug recommendations. The key question will always be: To cure one patient in a comfortable regime or three in an uncomfortable regime? In addition, most health care systems outside the United States are very price sensitive. Thus, in the near and far future, Simeprevir in various combinations e. g. with interferon should still be attractive as the price should drop significantly.

“The new ATTAIN data presented at the Viral Hepatitis Congress adds to the breadth of data that highlights the value of simeprevir, in combination with pegylated interferon and ribavirin, as well as helping to further define patients who can benefit from this therapy,” said PD Dr. med. Holger Hinrichsen, Centre for Gastroenterology and Hepatology, Kiel, Germany and investigator of the ATTAIN study. “While interferon-free regimens are a focus of industry clinical development programmes, these results demonstrate that interferon based therapies still have an important role to play within current standards of treatment.”

Spain (please use google translate):


In addition, the above frequently referred J&J / Medivir competitor Bristol Myers Squibb recently abandoned its combo Daclatasvir and Asunaprevir.

“PRINCETON, N.J.–(BUSINESS WIRE)–Given the rapidly evolving hepatitis C (HCV) treatment landscape in the U.S., Bristol-Myers Squibb (NYSE:BMY) has decided that it will not pursue U.S. Food and Drug Administration (FDA) approval of the dual regimen of daclatasvir and asunaprevir for the treatment of HCV genotype 1b patients in the United States and has therefore withdrawn its new drug application (NDA) for asunaprevir, an NS3/4A protease inhibitor. The company will continue to pursue FDA approval of daclatasvir, a potent, pan-genotypic NS5A complex inhibitor (in vitro), which is currently being investigated globally in multiple treatment regimens for HCV patients with high unmet need.”

Furthermore, C.E.S.I. is not too concerned that Medivir will be the victim of a near future AbbVie death roll, primarily due to the necessity for the multiple treatments per day schedule (antiviral agents ABT-267, ABT-333 and ABT-450/ritonavir). What will be the consequenses if this high cost multi treatment per day schedule will be classified as a too difficult and complex practical procedure for the patient?

On the contrary, C.E.S.I. will follow the current and near future Merck pipeline and its news flow very closely.

However, C.E.S.I. believes that Olysio and various Simeprevir combos will successfully maintain a small market share over time in the 20 billion Heatitis C market

In fact, a small market share would be enough for the share holders and the company. Below, the author will explain why, but first: The 2014 first 6 months interim report, revealing Medivir´s excellent current financial situation:

In the worst case scenario, (i. e. the competitor´s successful death rolls of Olysio and Simeprevir in various combinations) would definitely not result in a total collapse for the company and it´s very low $ 500 market cap.


Medivir is not a one hit wonder. Medivir (remember that the currently extrapolated P/E of ~2-3), has several attractive in‐house projects in the development phase as well as a number of earlier discovery projects. Now, let´s analyze the company´s “residual” pipeline…

…reviles that another Medivir partner GlaxoSmithKline (GSK) relatively recently launched Xerclear (Labial Herpes)

At the time of the launch, Maris Hartmanis, CEO of Medivir commented:

 “Few companies of our size have experienced the launch of a product, developed in-house, that is now being introduced in Europe and has also been available in the US since last spring. This strengthens Medivir in our efforts to develop new drugs and is yet another step toward our goal of becoming profitable.”

C.E.S.I. : Simeprevir (Olysio) was also developed in-house.

Yet another example of Medivir “excellent performance and stability”:

In 2011, Medivir acquired Biophausia for 650 MSEK (~ $ 90 Million) and the company is now part of the Medivir group.

Medivir has recently launched new drugs:

Adasuve, schizophrenia, the first inhalable drug for the treatment of agitation:

On September 18, 2013, Grupo Ferrer announced that they have entered a license and distribution agreement for the commercialization of ADASUVE® (Staccato® Loxapine) in the Nordic region. In Europe, ADASUVE is approved for the treatment of mild to moderate agitation of patients with schizophrenia or bipolar disease.

Under the terms of the agreement, Grupo Ferrer grants to Medivir AB the exclusive rights to promote, market, sell and distribute ADASUVE in the Nordic region – including Denmark, Finland, Norway, Iceland and Sweden…

…The license and distribution deal between Grupo Ferrer and Medivir will help ensure that there will be an experienced and knowledgeable company in the Nordic countries of Denmark, Finland, Iceland, Norway, and Sweden to promote and market ADASUVE. Medivir has existing relationships with physicians and psychiatrists who are currently treating patients who are targeted by ADASUVE.

Recently, Medivir also re-launched the Biophausia angina drug Suscard (glyceryltrinitrate). Angina is the most common heart disease in the Western world

Furthermore, Medivir entered a license agreement with Boehringer Ingelheim International GmbH for exclusive, global rights to a drug program for the treatment and prevention of Respiratory Syncytial Virus (RSV) infection. The program includes novel compounds that inhibit the RSV fusion protein, which is a target for new medicines.

As mentioned above, Gilead´s new combo Harvoni (Ledipasvir in combination with Sofosbuvir) was yesterday approved. In respect to the competitor Medivir´s share price, this author (C.E.S.I.) strongly believes the approval is already priced in. Last week, the sales figures of both Sovaldi and Olysio decreased slightly, presumably due to warehousing.

Surprisingly, Medivir (/J&J / Jansen) managed to maintain a 29% market share. C.E.S.I. believes that the presumable warehousing can be translated to a near future drop of the Medivir market share (-10%?) in the US. However, this scenario should still be extremely satisfying for Medivir and it´s share holders, because it brutally exceeds the analysts early year sales predictions. One example is the Jefferies prediction:

The Olysio sales figure is still exceeding the 2014 year Jefferies prediction with roughly 100%.

Weekly Olysio sales figures is collected and highlighted by

Recently, positive predictions from key players in the Swedish stock market has announced positive near future dividend estimates.

In addition, the author also believes that Medivir will communicate a dividend and potentially also a share buy-back program in 5 days (Oct 16th) which should trigger the share price:

Latest news, Niklas Prager, (New) CEO Medivir:

Medivir will be hosting a Capital Markets Meeting for investors, analysts and journalists, on Thursday 16 October, at 2pm – 3.30pm CEST, in Stockholm. CEO Niklas Prager will give an update on the company’s strategy and capital structure!

Recent estimate by Nordea Markets: 40 SEK per share (sell recommendation)

Recent estimate by Erik Penser: Medivir share price estimate: 200 SEK (buy recommendation) (in Swedish)

Recent estimate by Carnegie: Minimum dividend of 35 SEK per share (buy recommendation), (in Swedish)


C.E.S.I. : Updated, extremely conservative, Medivir estimate:

In the original Medivir article, C.E.S.I. stated:

“In this link you´ll find Medivir´s entire research portfolio, but in this (first?) article, I choose not to comment upon additional potential near future share value triggers.

Let´s just state that Medivir’s research portfolio should mature as time goes by…”

Now, one single month has passed and two days ago Medivir announced that data will be presented from its Cathepsin S inhibitor program including MIV-247 for neuropathic pain, at the 15th World Congress on Pain…

In this conservative C.E.S.I. Medivir share price estimate, this press release will be defined as “no additional value”….

To the author´s delight, Janssen (J&J) is also still working hard to find new and creative Simeprevir combinations. Yesterday, Medivir announced that a phase II IMPACT study had been initiated to evaluate Simeprevir in combination with Sofosbuvir and Daclatasvir to treat genotype 1 and 4 hepatitis C patients. The author is confident that new clinical studies will be launched (to study new Simeprevir combinations, which today should be almost impossible to predict by C.E.S.I. or the market)

In this conservative C.E.S.I. Medivir shareprice estimate, this press release will be defined as “no value generation”…

Soon and even more importantly, the result from the phase III OPTIMIST studies will be presented:

Thus, the OPTIMIST studies might generate new Medivir ammunition: A 8 week once daily treatment regime for patients without cirrhosis and a 12 week once daily regime for patients with cirrhosis, compare Harvoni (Ledipasvir in combination with Sofosbuvir) and its 24 week regime!

The final data of the phase II COSMOS study indicated that for cirrhosis patients:

As stated earlier by C.E.S.I.: J&J is not a one-trick pony…(see previous C.E.S.I. Seeking alfa blog post)

The market cap (3.7 BSEK) is very low in relation to the estimated full years liquid assets: ~2 BSEK (Q1+Q2 = 850 MSEK, Q3 >Q2 (according to Rein Piir, EVP Corporate Affairs & IR – Investor Relations) and Q3 ~ Q4 (Cutting Edge Science Invest estimate).

C.E.S.I. 2014 year´s P/E estimate = 2-3

This equals an extremely attractive Risk / Reward.

Risk estimate: -15% Share price within 0-12 months, if J&J totally fails in all of the large number of activities, phase II and III clinical trials, Olysio will be death rolled by competitors. Remember: This outcome should already be priced in by analysts!

Award estimate: J&J will succeed to maintain a small long term US and / or world market share of Olysio and / or Simeprevir in other combinations. Medivir should deliver from the current pipeline, increased sales of current residual drugs, initiation of market appreciation leads to a higher P/E which equals a positive factor, not a percentage, of todays´ Medivir share price. C.E.S.I. will not be too surprised if this factor is in the range of 5-8 (i. e. 500-800%) within a few years.

Advantage: Currently, external negative market factors should have low impact of the Medivir share price. (e. g. October 12, 2014, OMXS30 -1.51%, S&P-500 -1.15, Medivir share price +4.84%)

Best regards, Cutting Edge Science Invest

Note: This manuscript was also submitted to a few seconds ago (00:33, October 13, 2014, Status: under review).

Cutting Edge Science Invest has been a share holder for a long time and also intends to keep these shares for a long time. Cutting Edge Science Investor can not guarantee, or take into  accountability, the content of truth and accuracy of the information in this article/post. Thus, Cutting Edge Science Invest requires that a possible reader gather complimentary information if any type of investment in the company described above is considered. In other words: Cutting Edge Science Invest´s provides personally biased information and at best also “general information and opinions”. The article/post does not contain professional investment advice. Cutting Edge Science Invest also wants to point out that the real risks are those you never knew existed – until it was too late.

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