Macro Tsimmis

intelligently hedged investment

Vertex (VRTX) update #11

Posted by intelledgement on Sun, 27 Apr 08

Another good week for Vertex (VRTX), one of our biotech plays, whose stock price has roared back from the mid-teens to the mid-twenties in the space of the last month.

On Monday, the company reported a 1Q08 loss of $96MM, higher than a year ago ($81MM), but in line with expectations that they will produce around $400MM of red ink in 2008 as the huge 4000-patient phase 3 telaprevir trial—which started in March—chugs forward. The press release includes a good update on the progress of all their current trials and research…and for more details, check out the Q&A in this transcript of the conference call they held Monday.

On Wednesday, new phase 2b trial data were released confirming the efficacy of telaprevir for treatment naive hepatitis C patients. “Final results from PROVE 1 and further interim analysis from PROVE 2 showed consistently higher SVR rates and antiviral response in the 24-week telaprevir arms — 61% of patients in PROVE 1 and 68% of patients in PROVE 2 achieving SVR, compared with 41% of patients in the PROVE 1 control arm achieving SVR and 48% of patients in the PROVE 2 control arm having undetectable HCV RNA at 12 weeks post-treatment,” according to the press release. So, we know the drug works 50% better than anything on the market and with a course of treatment that is half as long as the current SOC. The results of the just-started 4000-patient Phase 3 trial should provide the FDA with sufficient data on safety for them to make an approval/disapproval decision in 2011.

Then on Thursday, we got tantalizing preliminary results from an open-label trial of telaprevir for hepatitis C patients who had not responded to the standard of care (SOC) treatment (48 weeks of interferon plus ribaviron). When such patient repeat the SOC treatment, typically about 10% are cured, and as 48 weeks of taking interferon and ribaviron render most people unable to work and is generally no fun, the incentive to undertake a second goaround is not great. But…after four weeks of a 12-week course of treatment with telaprevir (plus interferon and ribaviron) to be followed by an additional 12 weeks of interferon and ribaviron, 82% of patients (49 out of 60) showed a significant reduction of the hepatitis C virus (to below 25 IU/mL). Although there is typically some dropoff in response as treatment continues, so far 36 of those patients have reached eight weeks and 16 of those have reached 12 weeks and they all continue to measure below 25 IU/mL.

These data are skimpy and preliminary, but if telaprevir can cure, say, 30% of those hepatitis C patients who are not cured by the SOC treatment—which is about half of those who try it—then barring serious adverse effects it is extremely likely to be approved by the FDA in an accelerated process, possibly based on the forthcoming Phase 2 trial data, as that patient population is otherwise in a very bad situation. We should get a better reading from the bigger Prove Phase 2b studies Vertex are running now; some preliminary results from them are expected in June.

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