Johnson & Johnson (JNJ) recently received EU approval for its hepatitis C virus (HCV) treatment, Incivo (telaprevir). The European Commission approved Incivo for the treatment of genotype-1 chronic HCV, in combination with peginterferon alfa and ribavirin, in adults.
Incivo’s approval was expected as the product had received a favorable recommendation from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) in July 2011. EU approval was based on data from three phase III studies – ADVANCE, REALIZE and ILLUMINATE.
Incivo plus peginterferon alfa and ribavirin have been shown to bring about significant improvements in cure rates, also known as sustained virologic response (SVR), in both treatment naïve and treatment experienced patients compared to the standard treatment with peginterferon alfa and ribavirin alone. Moreover, Incivo reduces the current total treatment duration by half in the majority of treatment naïve and treatment experienced patients.
Incivo is currently available in the US under the trade name Incivek. Incivek is already off to a strong start in the US with net product revenues coming in at $74.5 million in the second quarter of 2011. Incivek/Incivo has been developed by Johnson & Johnson’s Tibotec in collaboration with Vertex Pharmaceuticals (VRTX) and Mitsubishi Tanabe Pharma.
While Johnson & Johnson has the right to commercialize Incivo in Europe, Latin America, the Middle East, Africa, India, Australia and New Zealand, Vertex has the right to commercialize Incivek in North America. Meanwhile, Mitsubishi Tanabe Pharma has the right to commercialize the product in Japan and certain Far Eastern countries.
The chronic HCV market represents huge commercial opportunity. According to the World Health Organization (WHO), more than 170 million people are infected with chronic HCV across the world. Incivo/Incivek will be mainly competing with Merck’s (MRK) Victrelis, which also gained US and EU approval in 2011.
Neutral on Johnson & Johnson
We currently have a Neutral recommendation on Johnson & Johnson, which carries a Zacks #3 Rank (short-term Hold rating). Even though we expect the company to continue facing headwinds in the form of EU pricing pressure, manufacturing issues and US healthcare reform, we believe Johnson & Johnson’s diversified business model, lack of cyclicality, and strong financial position will continue helping the company pave its way through tough situations.
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