Johnson & Johnson’s Janssen Sciences Ireland said today it will halt development of the hepatitis C (HCV) combination treatment JNJ-4178, citing the growing availability of new treatments since the up-to-$1.1 billion collaboration with Achillion Pharmaceuticals was launched in 2015.

JNJ-4178 is a combination of three direct-acting antivirals—AL-335, a nucleotide-based HCV NS5B polymerase inhibitor that Janssen inherited by acquiring Alios BioPharma for $1.75 billion in 2014; Achillion’s ACH-3102 (odalasvir), an HCV NS5A inhibitor; and the Janssen-marketed hepatitis C drug Olysio® (simeprevir), an HCV NS3/4A protease inhibitor licensed from Medivir.

Janssen said ongoing phase II studies with JNJ-4178 will be completed as planned, but no additional development will occur thereafter.

“Going forward, our hepatitis R&D efforts will focus on chronic hepatitis B, where a high unmet medical need still exists,” Lawrence M. Blatt, Ph.D., global therapeutic area head, infectious disease therapeutics, Janssen, said in a statement. “Our scientists are energized by this challenge and our research ambition is to achieve a functional cure of hepatitis B, which affects over a quarter of a billion people globally.”

Janssen and Achillion launched their collaboration in May 2015, with a key objective of developing a short-duration, highly effective, pan-genotypic, oral regimen for hepatitis C.

Achillion today issued a statement that noted JNJ-4178 generated positive mid-stage data last year, showing a 100% cure rate following six weeks of treatment—but also indication that Achillion was refocusing its hepatitis efforts beyond the combination therapy.

“We are disappointed by Janssen's decision to discontinue HCV development given the positive data presented in phase 2a with JNJ-4178,” Achillion President and CEO Milind Deshpande, Ph.D., stated. “While we believe that patients worldwide would benefit from convenient, short-duration therapies like JNJ-4178, we remain fully focused on advancing our factor D portfolio of complement alternative pathway inhibitors in areas where patient needs are greatest, and using our strong balance sheet of almost $370 million in cash and cash equivalents at June 30, 2017 to do so.”

Growth in Treatments Spur Sales Declines

Janssen’s decision follows the development of new treatments that reshaped the hepatitis C market. Gilead Sciences launched Sovaldi® (sofosbuvir) in 2013. A year later, Sovaldi rocketed to blockbuster status with $10.283 billion in sales despite an $84,000-per-treatment course price tag that drew the wrath of some in Congress.

But Sovaldi sales fell each year since, driven by falling cost and competition that began late in 2014 when Gilead reached agreements with seven generic drug makers in India to sell cheaper versions of the treatment in poorer nations. Last year, Gilead saw Sovaldi sales drop 24% from 2015, sliding to $4.001 billion from $5.276 billion.

Gilead also saw a year-over-year sales decline for another hepatitis C drug, Harvoni® (ledipasvir 90 mg/sofosbuvir 400 mg) which dropped 34.5%, to $9.081 billion, due to larger discounts to insurers.

Also reshaping the hepatitis C market, Janssen pointedly noted in its statement, were Incivek (telaprevir), a first-in-class protease inhibitor it co-developed with Vertex Pharmaceuticals—but which was withdrawn by Vertex from the U.S. in 2014, citing “diminishing market demand”—and Olysio, which was co-developed with Medivir and is marketed in some countries as Sovriad.

Sales of Olysio have free-fallen in recent years, plunging 73% in 2015 to $621 million from $2.302 billion in 2014, and plummeting again 82.9% last year, to $106 million. By the second quarter of this year, J&J acknowledged in a Form 10-Q regulatory filing “lower sales of Olysio” as a factor in a 3.4% drop in infectious disease products compared with Q1 2017, without disclosing sales figures for the treatment.

Medivir issued its own statement saying it continues to be entitled to royalties on sales of single agent simeprevir globally—and that the halt to JNJ-4178 development, while “unfortunate,” does not affect its ongoing partnership with Janssen on Olysio, its licensing agreement with Janssen in which Olysio is included, or Medivir’s other key drug-development programs.

“We continue to develop our proprietary pipeline in oncology and look forward to completing the ongoing Phase IIa studies in osteoarthritis” for pipeline candidate MIV-711, a Cathepsin K inhibitor. “Although Janssen's decision not to progress this promising treatment further is unfortunate, Medivir's focus does not change,” Medivir CEO Christine Lind added.