Bristol's daclatasvir is from a new class of drugs known as NS5A inhibitors. Gilead's GS-7977 is a nucleotide polymerase inhibitor. Both are designed to block enzymes essential to replication of the hepatitis C virus.

Bristol-Myers Chief Executive Lamberto Andreotti, speaking on Thursday at the Sanford Bernstein Strategic Decisions Conference in New York, said patients and both drugmakers stand to benefit if combined Phase III trials of the two medicines are pursued.

"We have a different point of view about whether to enter Phase III (trials) with that combination," Andreotti said. "We believe, for both patients and companies, it is better to move forward" in the short term.

But Andreotti said Gilead instead seemed intent on looking "in-house" -- focusing on combinations of its own products. Gilead officials could not immediately be reached to comment.

Andreotti said there was a "huge, unmet need" for better treatments among an estimated 170 million to 180 million people worldwide believed to be infected with the virus. Transmitted by blood transfusions, sexual contact or shared drug needles, the virus invades the liver and can steadily destroy the organ over decades. It is the most common reason for liver transplants in the United States.

Data from the mid-stage trial combining Gilead's GS-7977 and Bristol's daclatasvir showed a 100 percent response rate in previously untreated patients with the most common form of hepatitis C.

Shares of Gilead jumped 11 percent on April 19 when the data were released, showing the profound benefits of combining its 7977 -- acquired through Gilead's $11 billion purchase of Pharmasset -- with daclatasvir.

At the time, Bristol said Gilead had balked at further collaboration on the combination under study, which was begun while 7977 was owned by Pharmasset.

The results of the mid-stage study were accomplished without interferon, an injected drug that causes flu-like symptoms and other side effects that often lead patients to discontinue or delay treatment. Nor did the study use ribavirin, an older antiviral drug that is also currently part of all treatment regimens.

Instead of working with Bristol-Myers, Gilead is forging ahead with a study of 7977 in combination with its own experimental NS5A inhibitor. In the meantime, Bristol-Myers is testing daclatasvir with a drug similar to 7977 that it acquired with its $2.5 billion purchase of Inhibitex, as well as with other experimental drugs in its development pipeline.

In other remarks at the Sanford Bernstein meeting on Thursday, Andreotti said he expects some form of U.S. healthcare reform to emerge, even if the U.S. Supreme Court rules against extensive reforms approved by Congress and signed into law by President Obama.

The High Court is expected next month to render a decision on the sprawling legislation, which would greatly expand healthcare coverage to uninsured Americans but require bigger fees and rebates from drugmakers and medical device makers.

Andreotti said the enacted reforms "started out on the right foot" but became too complicated for Bristol-Myers and the American people.

The Bristol-Myers CEO said he expects rapidly declining sales of Plavix, a blood-clot preventer which has long been the company's biggest product, due to loss of U.S. patent protection earlier this month and ensuing competition from a number of cheaper generics. The pill, sold in partership with French drugmaker Sanofi, had revenue last year of more than $7 billion -- making it one of the world's top-selling medicines.

Despite expected plunging sales of Plavix, Andreotti said Bristol-Myers has no plans to "downsize" its research spending, having already closed down many company facilities in previous cost-cutting efforts.

Bristol-Myers will adjust future R&D spending in accordance with company performance, and expects significant sales gains to come from Asia but not from Europe, Andreotti said.

He said the company plans over the next few years to concentrate on developing medicines to treat cancer, viral infections and blood clots -- calling those therapeutic areas "the three pillars" of company growth.

(Reporting By Ransdell Pierson; Additional reporting by Bill Berkrot; Editing by Maureen Bavdek and Gunna Dickson)

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