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Pharmasset Rises to New Highs on Hepatitis C Drug


Expectations are sky high for study data to be released next month for treating hepatitis C.

Pharmasset (VRUS) shares -- already up almost 300% on the year -- are rising again.

The stock is trading higher Monday after the company said it is expanding a clinical trial of its hepatitis C drug candidate, PSI-7977. In one arm of the study, the company will test the drug as a single therapy for the liver-destroying virus hepatitis C in some patients.

The announcement should be viewed as an incremental step and it follows other positive announcements, but it shows the company's confidence in its drug. The goal for all hepatitis C drug developers is to simplify the treatment and eliminate the need for the injected therapy interferon, which has side effects. Pharmasset is testing its drug without interferon and plans to reveal mid-stage study data at a medical conference next month.

Pharmasset is moving ahead of other hepatitis C drug developers toward the goal of one or two drugs to treat the chronic condition, Robert W. Baird analyst Thomas Russo says.

He also noted that the company "is pushing the envelope yet again, adding even more ambitious experiments with PSI-7977" and "is now setting the bar for the entire Hepatitis C space."

Russo has a buy recommendation with a price target of $88 a share. The stock rose 7% to $86.51 in midday trading Monday.

The company now has a $6.5 billion market cap with no approved products. That's not unprecedented. Vertex Pharmaceuticals (VRTX) had a similar rise on its path to US approval of the hepatitis C drug Incivek in May. That drug is expected to be a blockbuster even with competition from Merck's (MRK) Victrelis, which was approved the week before Vertex's product. (See Vertex Hepatitis Drug Beats Estimates.)

Both Vertex and Merck drugs are considerable improvements over past treatments for hepatitis C, which affects tens of millions of Americans. Worldwide, an estimated 180 million people are infected with the virus. For many people, they were infected by dirty needles decades ago.

While the products are considered breakthrough drugs, the Merck and Vertex treatments still are administered with the older drugs interferon and ribavirin. (Vertex shares declined 9% to $40.44 midday Monday.)

If Pharmasset drug trials prove to be successful, the company could have the future standard for hepatitis C treatment. The company will present data on PSI-7977 at the annual meeting of the American Association for the Study of Liver Diseases in San Francisco early next month.

Twitter: @brettchase

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