Data presented at the 2012 International Liver Congress of the European Association for the Study of the Liver last month showed Gilead Sciences Inc.'s nuc drug GS-7977 works well with Bristol-Myers Squibb Co.'s NS5A inhibitor daclatasvir. In a Phase II trial, the combination achieved a stunning 100 percent sustained virologic response (SVR) four weeks after a 24-week treatment. (See BioWorld Today, April 20, 2012.)

But moving the combination into Phase III development isn't as clear cut as it would seem. BMS spokeswoman Sonia Choi told BioWorld Today that BMS was interested in a partnership, but Gilead has indicated that the company hasn't decided the best option for an all-oral regimen.

Gilead has its own NS5A inhibitor, GS-5885, further behind in the clinic, which many analysts think Gilead will swap for daclatasvir. "We expect Gilead to move rapidly through drug-drug interaction studies with in-house NS5A '5885 and begin a '7977+'5885 combo study shortly," noted Wells Fargo analyst Brian Abrahams.

The design and duration of that trial depends on the outcome of two trials that will read out later this year. BMS is running a Phase II trial testing the GS-7977 and daclatasvir combination for just 12 weeks to see if that's sufficient to achieve SVR. Gilead also is waiting for the 24-week data in its Phase II QUANTUM trial that combines GS-7977 and ribavirin to see if a longer course without an NS5A inhibitor will work.

There is risk in swapping GS-5885 for daclatasvir, but Gilead's management doesn't seem worried. "We think there is no reason to believe that we wouldn't get the same results with 5885 as Bristol-Myers has achieved with daclatasvir," Gilead's CEO Norbert Bischofberger told analyst on a conference call.

Wells Fargo's Abrahams came to a similar conclusion, noting that "physicians we spoke with at [EASL] said they believe '5885 appears to have very similar activity to daclatasvir, making it likely to produce similar SVRs with '7977."

The confidence comes from preclinical data demonstrating relatively similar antiviral potency in vitro and the steepness of the viral load declines in patients. Gilead has already run a drug interaction study with GS-7977 and GS-5885 that indicated no dose adjustments are necessary when the two agents are used together.

A Phase II trial with the two compounds hasn't been run yet, putting GS-5885 behind daclatasvir, but Gilead expects to leapfrog over Phase II to help catch up. "We don't have any outstanding concerns about safety of any of our products, 5885 or 7977, so we feel comfortable moving into a large Phase III study," Bischofberger said.

To hedge its bets, and perhaps make the FDA feel more at ease with jumping straight into a Phase III trial, Gilead anticipates it probably wouldn't enroll all the patients at once, but would run an initial cohort and look at interim data before proceeding with more patients. "So it would be something like more a Phase II/III study," Bischofberger said.

ISI Group analyst Mark Schoenebaum polled his clients and found only about half of them think Gilead should agree to a partnership with BMS, but that number jumped to 80 percent if Gilead could get a financial piece of BMS's drug.

Schoenebaum told BioWorld Insight his estimate of Gilead's value is higher if it goes it alone because retaining all the profits from a combination more than makes up for any delay in getting the product to market.

If Gilead does develop the entire product in house, the move would mimic the company's strategy in the HIV space, where it's developed a fully owned quad drug containing Truvada (emtricitabine/tenofovir disoproxil fumarate) plus elvitegravir and boosting agent cobicistat that will compete with combination drugs developed with its partners: Atripla, containing Truvada and BMS' Sustiva (efavirenz), and Complera, containing Truvada and Edurant (rilpivirine) from Janssen Therapeutics, a division of Janssen Products LP.