Macro Tsimmis

intelligently hedged investment

Vertex (VRTX) update #15

Posted by intelledgement on Tue, 19 Aug 08

Our development-stage biotech Vertex (VRTX) today announced the launch of their phase 3 trial for their anti-hepatitis C drug candidate, telaprevir specifically aimed at patients who tried the current standard of care (SOC)—48 weeks of nausea-inducing interferon plus ribaviron—and were not cured. 

Of the approximately six million people infected with hepatitis C in the U.S. and E.U., the SOC has been tried and failed to cure some 650,000, according to the press release. Preliminary data from large ongoing phase 2 trials have indicated a 24-week course of treatment that includes 12 weeks of telaprevir could cure as many as half of these folks. Repeating the current SOC cures about 10% of them. Conservatively, if a cycle of treatment is priced at $10,000 and one-third of the infected population eventually employs telaprevir, we are talking about at least a $20B potential. And the numbers could easily be, say, $15,000 and 60%, depending on how quickly better treatments come online. 

Telaprevir appears to have at least a two or three year window where nothing better could be available—but an important variable is how soon the drug could be approved. Pertinently, when this trial was announced last June, investors were disappointed because all the arms are 48-week courses of treatment. The difference implies that the FDA is unlikely to approve limited use of telaprevir for treatment-failure patients based on the phase 2 trial results (which previously was considered a feasible alternative both because the preliminary results have been excellent and because the trials are unusually large). This would push back potential approval at least a year.

Having said that, during the 2Q08 conference call, management would not rule out the possibility that they might file for limited approval based on the final phase 2 results at the end of 2009. So stay tuned…that, at least, is our plan.


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