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The Company is in the business of discovering, developing and commercializing small molecule drugs for the treatment of serious diseases.
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bhessel (92.76) Submitted: 12/24/07 9:25 AM : Start Price: $31.51 VRTX Score: 16.90
17 Apr 07Vertex Pharmaceuticals is a biotech company with a protease inhibitor drug—telaprevir—just completing Phase II testing that promises dramatic improvement in the treatment of Type 1 hepatitis C ( http://en.wikipedia.org/wiki/Hepatitis_c ), which is both the most prevalent and the most pervasive form of the disease. There are an estimated 170MM people with chronic hepatitis C—meaning they can’t clear their bodies of the virus unaided—in the world, and 3.2MM in the USA; 80% of those in the USA are infected with Type 1. The number of chronic cases in the USA is expected to rise to over 10MM within the next decade or so.Because hepatitis C is asymptomatic for years—basically until liver function begins to degrade—many infected people don’t know they have it. People infected suffer innocuously mild and brief flu-like symptoms within a few weeks—which are rarely ominous enough to trigger alarm bells—and then nothing…until things get deadly serious. However, a blood test—if the patient happens to have one—can detect the infection.The current standard of care (SOC) for hepatitis C in the USA requires a 48-week course of treatment with interferon and ribavirin, and it is no walk in the park—many patients experience flu-like symptoms for several days following each weekly interferon injection and some suffer severe adverse events including anemia, cardiovascular distress, and depression. For those able to complete the course of treatment—about half of all those who start it—fewer than 40% appear to be free of any hepatitis C virus (HCV) and, thus, effectively cured. The combination of a year of being more-or-less disabled, the cost, and the 60+% chance of not being cured after all that has discouraged many asymptomatic HCV carriers who know they are infected from undergoing treatment. Currently only about 2% of chronic HCV carriers undergo treatment each year (which means only about half of one percent are cured annually).In Phase 1 trials, patients dosed with telaprevir in combination with interferon or in combination with interferon and ribavirin for much shorter courses of treatment experienced effective cure rates of around 70%. Currently the company is conducting three Phase 2 trials ( http://www.vrtx.com/current-projects/drug-candidates/telaprevir-VX-950.html ) with a total of 1000 patients testing various combinations of treatment agents and course-of-treatment durations (including 12 and 24 weeks) against a control of the current SOC (48 weeks of interferon and ribavirin). Preliminary data are due to be publicly released this Fall and the company expects to launch Phase 3 testing by the end of the year (presumably the data they already have from Phase 2 are strong and they are working with the FDA to design their Phase 3 trials in light of these data…there was some hope the FDA might be able to approve based on the Phase 2 data, but that seems to have evaporated).Telaprevir clearly works and a cure rate of 70% in half or one-quarter the time would be a major advance over the current SOC. The cardinal fly in the ointment thus far is a new telaprevir-related side effect that surfaced in some of the early Phase 2 results—a serious rash that contributed to a relatively high 8% early days drop out rate and takes weeks to recover from. Hopefully the Vertex folks will learn enough from these trials about under what circumstances this rash is likely to be a problem to minimize the risk going forward.Critically, Vertex has a clear shot at being first to market a product that improves materially on the current SOC for hepatitis C. Back when it appeared as if approval from the large Phase 2 trials was likely, they had a huge time advantage (presuming the potential competition all had to go through Phase 3); even now most of the potential competition are in Phase 1 or earlier. The closest potential competitor is boceprevir from Schering Plough (SGP)—who market interferon for hepatitis C, although it is a minor market for that drug—and is early in Phase 2 testing. Unless telaprevir is significantly delayed, it is likely to have established a dramatically shorter course of treatment employing all three agents—telaprevir, interferon, and ribaviron—as the new SOC.And the market is potentially huge. About $700MM annually is presently spent on interferon/ribaviron for HCV treatment of 2% of the potential patients (of whom only 25% are typically cured—half drop out before completing the 48 weeks…although a few of those are cured never-the-less…and about 35% of those who stick out the full 48 weeks are cured…for some unknown reason, almost 50% of those who stick out the full course in Europe are cured). With a shorter course of treatment and a better chance of success, the number of patients willing to undergo treatment is likely to increase dramatically, while the dropout rate will fall.Now from a valuation point of view, biotech companies with their first $1B blockbuster potential drug and the earning growth to match—e.g., CELG today and AMGN, BGEN, DNA in the past—typically command multiples of 15x to 20x revenues depending on how The Street regards their pipeline. (Mature healthy pharmas have marketcaps more typically in the 4x to 6x revs range.) Presuming for the sake of argument that the dollars/patient remain constant—the cost of the interferon/ribaviron is less because only half as much is needed but telaprevir takes up the slack—and that the proportion of patients seeking treatment rises from 2% in 2009 (when the FDA approves telaprevir) to 7.4% by 2012, by than telaprevir should be generating over $2B in revenues from the USA alone. By 2014, we are looking at a potential $4.3B in USA telaprevir revenues—and presuming 10% annual dilution through 2012 and 5% thereafter (as the company will be profitable and presumably won’t be so needful of selling shares to raise cash)—the share price at a P/S ratio of 15x sales puts the pps at $287. (Only 15x and not 17.5x as we used for ELN because we feel the pipeline here is not as strong.) Discount that price 25% per annum to reflect the various risk factors and we project a fair price for VRTX of around $38 by the end of 2007 (and much higher in the following years).And speaking of the USA, Vertex have retained all rights to that market (and, at least for now, the Far East), and have concluded a marketing agreement for telaprevir with Janssen Pharmaceutica N.V., a division of Johnson & Johnson for Europe, Middle East, Africa, and Central and South America. They are due an additional $380 million in milestone payments as telaprevir is tested and brought to market there.Beyond telaprevir, Vertex’s pipeline ( http://www.vpharm.com/current-projects.html ) is decent but not outstanding. They do have stuff: VX-702, a Phase II clinical trial product for rheumatoid arthritis and other inflammatory diseases, VX-770, a Phase I clinical trial product for cystic fibrosis, and VX-883, a preclinical stage product for bacterial infection. Plus in collaboration with Merck, there are MK-0457 and MK-6592, which are in Phase II clinical trials for the treatment of cancer; in collaboration with Avalon Pharmaceuticals AVN-944, a Phase I clinical trial product for cancer; and in collaboration with GlaxoSmithKline, VX-409 and backup compounds, which are in preclinical stage for the pain management. Currently, they receive revenue for Lexiva/Telzir for the treatment of HIV infection and AIDS, which are marketed/distributed by GlaxoSmithKline. Nothing here that appears to have blockbuster potential as yet…with the potential exception of VX-500, which is their follow-on HCV protease inhibitor drug, currently in pre-human testing. Ideally this would be ready to take over from telaprevir—with better efficacy and milder AEs—around 2013 or so.Of course, first they have to get telaprevir itself to market…and in that regard, there is always the Dendreon factor. A drug is not approved until it is approved. But here, in contrast to Provenge, we have a drug that has outstanding efficacy credentials, with a 1000-patient Phase 2 already (Provenge had a few hundred in Phase 3…and missed the primary endpoint). So based on where we are now, Vertex look to be giving the FDA an easy decision. There remains a risk of an unanticipated side effect showing up in Phase 3—that is why we do these tests, afterall—or even beyond (as with Tysabri). This is why we discount 25% per annum off our projected fair value. If you don’t think that is a conservative enough discount, then pass this one up. One man’s speculation is another man’s plunge.Six month’s ago, when it appeared possible the FDA might approve based on the Phase 2 results, this stock was in the $40s. Based on a late-2009 approval and telaprevir revenues starting in 2010, that’s too expensive for us. But down here around $31, we’re good to go.
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bhessel (92.76) Submitted: 12/24/07 9:30 AM
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25 Jul 07 updateVertex (VRTX) announced their 2Q07 results ( http://investors.vrtx.com/releasedetail.cfm?ReleaseID=256201 ) today and as expected, they continued to spend money a lot faster than it is coming in, a condition expected to persist until 2010 at least (by which time we hope telaprevir will be approved by the FDA and Vertex can start paying their own electric bills).But the big news was an update on the PROVE 1 phase 2 results for telaprevir. A followup test for a group of patients who completed a 12-week course of telaprevir-interferon-ribavirin followed by a 12-week course of interferon-ribavirin—a total course of treatment of 24 weeks compared with the current standard of care (SOC) treatment of 48 weeks of interferon-ribavirin—to check their viral levels. “Among the patients who completed 24 weeks of therapy and had undetectable HCV RNA (less than 10 IU/mL) at the end of treatment, fewer than 10 percent had relapsed by the end of 12 weeks post-treatment follow-up,” according to the press release.Obviously this is not conclusive—just preliminary data and additional followups will be required to confirm these results—but it does suggest that telaprevir has the potential of dramatically shortening the current (debilitating) SOC course of treatment, with potentially superior results.Anyway, The Street liked the report with VRTX up 11% today on triple the normal volume.
25 Jul 07 update
Vertex (VRTX) announced their 2Q07 results ( http://investors.vrtx.com/releasedetail.cfm?ReleaseID=256201 ) today and as expected, they continued to spend money a lot faster than it is coming in, a condition expected to persist until 2010 at least (by which time we hope telaprevir will be approved by the FDA and Vertex can start paying their own electric bills).
But the big news was an update on the PROVE 1 phase 2 results for telaprevir. A followup test for a group of patients who completed a 12-week course of telaprevir-interferon-ribavirin followed by a 12-week course of interferon-ribavirin—a total course of treatment of 24 weeks compared with the current standard of care (SOC) treatment of 48 weeks of interferon-ribavirin—to check their viral levels. “Among the patients who completed 24 weeks of therapy and had undetectable HCV RNA (less than 10 IU/mL) at the end of treatment, fewer than 10 percent had relapsed by the end of 12 weeks post-treatment follow-up,” according to the press release.
Obviously this is not conclusive—just preliminary data and additional followups will be required to confirm these results—but it does suggest that telaprevir has the potential of dramatically shortening the current (debilitating) SOC course of treatment, with potentially superior results.
Anyway, The Street liked the report with VRTX up 11% today on triple the normal volume.
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bhessel (92.76) Submitted: 12/24/07 9:36 AM
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Vertex (VRTX) shares took a big hit today, down 13% on nearly 9x normal volume. The fuss was over a press release by Shering-Plough (SGP) ( http://www.schering-plough.com/schering_plough/news/release.jsp?releaseID=1064540 ) providing preliminary data on phase 2 of their HCV protease inhibitor, boceprevir. The results indicated that 79% of boceprevir patients—who took boceprevir, interferon, and ribavirin—had an undetectable level of HCV after 12 weeks of treatment compared with 34% of a control group on the current standard of care (SOC) regimen of interferon plus ribavirin. Also, there were no incidents of skin rash among the boceprevir patients (significant because in the Vertex studies, this is a notable side effect among telaprevir patients, increasing the dropout rate among them).This was a surprise because the phase 1 numbers for boceprevir were significantly inferior to telaprevir, so most had written it off as a potential competitor. To have it roar back with phase 2 numbers apparently comparable to telaprevir’s—and apparently less noisome side effects— is disquieting.Having said that, it is difficult to compare the studies. In the boceprevir study, patients are treated with ribavirin and interferon for four weeks prior to taking any boceprevir, which they then take in combination with ribavirin and interferon for either 24 or 44 additional weeks. There is no pretreatment in the telaprevir studies; maybe the Schering-Plough guys were smarter to think of it but one wonders how much better telaprevir’s results might have been in a similar circumstance. In the event, the shortest proposed boceprevir course of treatment is 28 weeks including four weeks of just interferon and ribavirin followed by 24 weeks of all three drugs. The shortest telaprevir course of treatment is 24 weeks including 12 weeks of all three followed by 12 weeks of interferon and ribavirin. Some telaprevir patients dropped out because of the rash; likely some boceprevir patients will drop out because of the extra month of debilitating interferon injections…we will have to await the final numbers to see which is worse.Vertex were very aggressive in designing the parameters for the phase 2 trials; there was some hope at the time that with outstanding results, these might suffice for approval. For example, in measuring sustained virologic response (SVR—that is, the lack of detectable levels of HCV in the patient’s blood as time goes by), Vertex used a standard of HCV RNA <10 IU/ml. while Schering-Plough were content with a measure of HCV RNA <15 IU/ml. It would be interesting to know how many patients in the respective studies fell into this gap, but clearly to compare them either the telaprevir rates should be adjusted up or the boceprevir rates down.In the event, the main point is that Vertex are moving faster with their studies. Their phase 2 studies were bigger with more rigorous standards and they expect to start their phase 3 study by the end of 2007. SGP are still just getting preliminary results from phase 2 and have not yet announced plans for phase 3 testing of boceprevir. Unless there is an unanticipated problem with telaprevir, it is still likely to beat boceprevir to market by at least six months.And speaking of progress, soon we will have more telaprevir data to kick around—the company has promised to release more interim phase 2 data early next month at the annual American Association for the Study of the Liver meeting in Boston.Bottom line: we need to pay more attention to boceprevir that we thought, but telaprevir still has the inside track to the lion’s share of a huge market. Looks as if this selloff—which has brought the stock back down to where we bought it—is overdone. LOL welcome to the wonderful world of stock speculation, not to be confused with investing.
Vertex (VRTX) shares took a big hit today, down 13% on nearly 9x normal volume. The fuss was over a press release by Shering-Plough (SGP) ( http://www.schering-plough.com/schering_plough/news/release.jsp?releaseID=1064540 ) providing preliminary data on phase 2 of their HCV protease inhibitor, boceprevir. The results indicated that 79% of boceprevir patients—who took boceprevir, interferon, and ribavirin—had an undetectable level of HCV after 12 weeks of treatment compared with 34% of a control group on the current standard of care (SOC) regimen of interferon plus ribavirin. Also, there were no incidents of skin rash among the boceprevir patients (significant because in the Vertex studies, this is a notable side effect among telaprevir patients, increasing the dropout rate among them).
This was a surprise because the phase 1 numbers for boceprevir were significantly inferior to telaprevir, so most had written it off as a potential competitor. To have it roar back with phase 2 numbers apparently comparable to telaprevir’s—and apparently less noisome side effects— is disquieting.
Having said that, it is difficult to compare the studies. In the boceprevir study, patients are treated with ribavirin and interferon for four weeks prior to taking any boceprevir, which they then take in combination with ribavirin and interferon for either 24 or 44 additional weeks. There is no pretreatment in the telaprevir studies; maybe the Schering-Plough guys were smarter to think of it but one wonders how much better telaprevir’s results might have been in a similar circumstance. In the event, the shortest proposed boceprevir course of treatment is 28 weeks including four weeks of just interferon and ribavirin followed by 24 weeks of all three drugs. The shortest telaprevir course of treatment is 24 weeks including 12 weeks of all three followed by 12 weeks of interferon and ribavirin. Some telaprevir patients dropped out because of the rash; likely some boceprevir patients will drop out because of the extra month of debilitating interferon injections…we will have to await the final numbers to see which is worse.
Vertex were very aggressive in designing the parameters for the phase 2 trials; there was some hope at the time that with outstanding results, these might suffice for approval. For example, in measuring sustained virologic response (SVR—that is, the lack of detectable levels of HCV in the patient’s blood as time goes by), Vertex used a standard of HCV RNA <10 IU/ml. while Schering-Plough were content with a measure of HCV RNA <15 IU/ml. It would be interesting to know how many patients in the respective studies fell into this gap, but clearly to compare them either the telaprevir rates should be adjusted up or the boceprevir rates down.
In the event, the main point is that Vertex are moving faster with their studies. Their phase 2 studies were bigger with more rigorous standards and they expect to start their phase 3 study by the end of 2007. SGP are still just getting preliminary results from phase 2 and have not yet announced plans for phase 3 testing of boceprevir. Unless there is an unanticipated problem with telaprevir, it is still likely to beat boceprevir to market by at least six months.
And speaking of progress, soon we will have more telaprevir data to kick around—the company has promised to release more interim phase 2 data early next month at the annual American Association for the Study of the Liver meeting in Boston.
Bottom line: we need to pay more attention to boceprevir that we thought, but telaprevir still has the inside track to the lion’s share of a huge market. Looks as if this selloff—which has brought the stock back down to where we bought it—is overdone. LOL welcome to the wonderful world of stock speculation, not to be confused with investing.
bhessel (92.76) Submitted: 12/24/07 9:38 AM
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29 Oct 07Here is an interesting post on The Motley Fool New Paradigm Investing message board comparing the boceprevir and telaprevir trials in some detail:http://boards.fool.com/Message.asp?mid=26038602
29 Oct 07
Here is an interesting post on The Motley Fool New Paradigm Investing message board comparing the boceprevir and telaprevir trials in some detail:
http://boards.fool.com/Message.asp?mid=26038602
bhessel (92.76) Submitted: 12/24/07 9:43 AM
30 Oct 07 updateVertex (VRTX) released their 3Q07 numbers yesterday and hosted a teleconference for investors. Here is a link to a transcript:http://seekingalpha.com/article/51959-vertex-pharmaceuticals-inc-q3-2007-earnings-call-transcriptTheir R&D expenses were up but they still expect to hit their overall FY numbers. The only new news on Telaprevir was that—as expected—they are in discussion with the FDA concerning the definition of their phase 3 study, but disappointingly, management were unwilling to discuss any sort of time frame at this stage. Given that it is practically November, it is now evident that there will be no phase 3 launch this year, as previously hoped…and management’s sudden reticence to discuss timing gives one pause as to the likelihood of a launch early in 2008. A substantial delay translates into a delay in potential approval, which in turn means a delay in potential revenue and black ink, which in turn translates into a lower present day valuation, given the need to discount the risk over a longer time frame.Meantime, new Phase II interim efficacy data are due out in the next week (to be presented at the 2007 American Association for the Study of Liver Diseases conference in Boston starting this Friday). Final efficacy and safety data are expected sometime in 2008; if the FDA want to see those before settling on a plan for the phase 3 study—which normally would make sense but expectations here were that we could speed things up given the robustness (1000 patients) and stellar interim results of the phase 2 trials—we are probably looking at a delay of a year or more here.There was some discussion of a new anti-HCV compound and also a potential anti-cystic fibrosis compound, but both of those are very early days.
30 Oct 07 update
Vertex (VRTX) released their 3Q07 numbers yesterday and hosted a teleconference for investors. Here is a link to a transcript:
http://seekingalpha.com/article/51959-vertex-pharmaceuticals-inc-q3-2007-earnings-call-transcript
Their R&D expenses were up but they still expect to hit their overall FY numbers. The only new news on Telaprevir was that—as expected—they are in discussion with the FDA concerning the definition of their phase 3 study, but disappointingly, management were unwilling to discuss any sort of time frame at this stage. Given that it is practically November, it is now evident that there will be no phase 3 launch this year, as previously hoped…and management’s sudden reticence to discuss timing gives one pause as to the likelihood of a launch early in 2008. A substantial delay translates into a delay in potential approval, which in turn means a delay in potential revenue and black ink, which in turn translates into a lower present day valuation, given the need to discount the risk over a longer time frame.
Meantime, new Phase II interim efficacy data are due out in the next week (to be presented at the 2007 American Association for the Study of Liver Diseases conference in Boston starting this Friday). Final efficacy and safety data are expected sometime in 2008; if the FDA want to see those before settling on a plan for the phase 3 study—which normally would make sense but expectations here were that we could speed things up given the robustness (1000 patients) and stellar interim results of the phase 2 trials—we are probably looking at a delay of a year or more here.
There was some discussion of a new anti-HCV compound and also a potential anti-cystic fibrosis compound, but both of those are very early days.
bhessel (92.76) Submitted: 12/24/07 10:16 AM
5 Nov 07 updateWell, it’s more speculation fun for our hepatitis C play, Vertex (VRTX), which is now in triple whammy mode.A week ago, the company reported 3Q07 results and management failed to repeat earlier suggestions about the start of phase 3 testing for their would-be lead product, telaprevir by the end of 2007, engendering concerns that the FDA might mandate a substantial delay.Then on Friday at the American Association for the Study of Liver Diseases conference in Boston, the company reported more interim data from their ongoing phase 2 trials including efficacy results that came in on the low side of the expected range (61%-to-65% cure rate; many were hoping for 70% ) and on the high side on safety concerns (7%-to-8% of patients dropped out of the course of treatment due to telaprevir-related skin rash issues). The stock was down 9% on 4x normal volume.And thirdly, starting on Friday and continuing through the weekend at the conference, new information came to light about a raft of potential competitors. Here is a rundown:Boehringer Ingelheim (privately held): have a second generation HCV product currently being tested with humans in Europe and expect to start trials in the USA soon; this was the first company to develop an efficacious anti-HCV protease inhibitor several years ago but it flamed out in animal testing with cardiac toxicity issuesGilead (GILD): has a polymerase inhibitor antiviral product for HCV under developmentHuman Genome Sciences (HGSI)/Albuferon: This is a long-acting interferon product currently enrolling phase 3 studies…patients only need a shot every two weeks instead of every week, which could make the SOC only half as onerous as the flu symptoms attendant to every such shot are the most debilitating adverse effects (AEs)…not particularly a competitor to telaprevir (because there is no indication that efficacy is improved) but potentially good news for everyone in HCV-landIdenix (IDIX): has a polymerase inhibitor antiviral product for HCV under developmentInterMune (ITMN)-Roche (RO.SW) partnership/ITMN-191: this one is considered a “me-too” candidate as, like boceprevir and telaprevir, it requires dosing three times a day—unlike most of the other new drugs on this list which require only one or two daily doses—and so would have to have efficaciousness and safety off the charts to keep it competitiveMerck (MRK): has a protease inhibitor antiviral product for HCV under developmentPharmasset (VRUS)-Roche (RO.SW) partnership/R7128: revealed a 14-day phase 1 monotherapy study of patients who failed to respond to SOC; there was a 99% mean decrease in HCV with no serious AEsRoche (RO.SW)/R1626: released results from a phase 2a study wherein HCV was undetectable in 81% of patients after four weeks of treatment with the drug in combination with interferon and ribavirin, with only mild to moderate AEs; a phase 2b study is currently enrolling patients in eight countries including the USARomark Laboratories (privately held)/Alinia: this one really comes out of left field—it is already approved as a drug for diarrhea caused by two different parasites, but now data from a small phase 2 study conducted in Egypt indicates success on eliminating HCV type 4…the company plans a trial with type 1 patients soon…the kicker here is that the drug costs $40 for a week’s supply, which is drastically cheaper than interferon/ribavirin, not to mention the projected prices of any of these other drugs under developmentTibotec (JNJ; they are a Johnson & Johnson company): has a protease inhibitor antiviral product for HCV under developmentVertex (VRTX)/VX-500: yep, Vertex too has a potential telaprevir-killer under development, expected to start phase 1 trials as early as December…of course if all goes according to the master plan, this drug—which presumably will be more effective, more convenient, and less toxic than telaprevir—will be dubbed “telaprevir2” and the transition to it would be more of a baton-passing thing than a race to the deathViroPharma (VPHM): has a polymerase inhibitor antiviral product for HCV under developmentThe thing is, there are no comparable data on efficaciousness on any of these drugs (except boceprevir, which seems inferior to telaprevir). So Vertex are shadow-boxing here against undefined opponents…any one of whom might be Goliath, or might be David without his slingshot. Or maybe just a dust cloth blowing in the wind and casting a scary-looking shadow.The Street, however, is considering the apparent delay in the start of phase 3 testing for telaprevir, the relatively tepid phase 2 results, and the large lineup of hungry understudies ready to rush into the spotlight should the star falter here and reducing their bets on VRTX: on the heels of Friday’s 9% decline on 4x normal volume, the stock was down another 17% today on 5x normal volume.For our part, we still like the potential here (which the plethora of competitors tends to confirm) and are inclined to hold to see what the outcome is with respect to the phase 3 schedule. If there is a substantial delay, or no word whatsoever by early 2008, then we will start considering alternative opportunities.
5 Nov 07 update
Well, it’s more speculation fun for our hepatitis C play, Vertex (VRTX), which is now in triple whammy mode.
A week ago, the company reported 3Q07 results and management failed to repeat earlier suggestions about the start of phase 3 testing for their would-be lead product, telaprevir by the end of 2007, engendering concerns that the FDA might mandate a substantial delay.
Then on Friday at the American Association for the Study of Liver Diseases conference in Boston, the company reported more interim data from their ongoing phase 2 trials including efficacy results that came in on the low side of the expected range (61%-to-65% cure rate; many were hoping for 70% ) and on the high side on safety concerns (7%-to-8% of patients dropped out of the course of treatment due to telaprevir-related skin rash issues). The stock was down 9% on 4x normal volume.
And thirdly, starting on Friday and continuing through the weekend at the conference, new information came to light about a raft of potential competitors. Here is a rundown:
The thing is, there are no comparable data on efficaciousness on any of these drugs (except boceprevir, which seems inferior to telaprevir). So Vertex are shadow-boxing here against undefined opponents…any one of whom might be Goliath, or might be David without his slingshot. Or maybe just a dust cloth blowing in the wind and casting a scary-looking shadow.
The Street, however, is considering the apparent delay in the start of phase 3 testing for telaprevir, the relatively tepid phase 2 results, and the large lineup of hungry understudies ready to rush into the spotlight should the star falter here and reducing their bets on VRTX: on the heels of Friday’s 9% decline on 4x normal volume, the stock was down another 17% today on 5x normal volume.
For our part, we still like the potential here (which the plethora of competitors tends to confirm) and are inclined to hold to see what the outcome is with respect to the phase 3 schedule. If there is a substantial delay, or no word whatsoever by early 2008, then we will start considering alternative opportunities.
bhessel (92.76) Submitted: 1/25/08 1:23 AM
[written Wed, 09 Jan 08]We were actually hoping to be writing this update last month, and focusing on the details for Phase 3 trials of Vertex’s (VRTX) protease inhibitor telaprevir, but obviously it is taking the company longer than expected to iron out the details with the FDA. Management did issue a press release this morning, however…actually, now yesterday morning…and here is a summary of their 2008 outlook.The main focus remains Phase 3 for telaprevir. Management have submitted a Phase 3 trial design to the FDA, and anticipate discussing it with FDA officials later this month. The design includes 8- and 12-week regimens of telaprevir dosing as part of a 24-week treatment with all patients getting interferon and ribavirin for the full 24 weeks, plus a control arm of patients who get SOC treatment (interferon and ribavirin) for 48 weeks. They promise an update by 11 February. In the meantime, Vertex’s ROW partner, Tibotec (a subsidiary of Johnson & Johnson/JNJ), are developing a design for Phase 3 trials in Europe.Also in the cards for 2008 is progress on VX-500, the company’s “next generation” HCV protease inhibitor. Vertex has initiated dosing in a Phase 1a clinical trial evaluating single, escalating doses of VX-500 in healthy volunteers. Pending results from the Phase 1a trial, management expect to initiate in mid-2008 a Phase 1b trial of VX-500 in HCV patients.Additionally, another next-generation investigational HCV protease inhibitor is expected to advance from research and enter clinical development in 2008.Also on the radar screen are a couple of cystic fibrosis (CF) candidate drugs. Vertex is conducting a randomized, double-blind, placebo-controlled Phase 2a trial of VX-770, an investigational potentiator compound for the treatment of CF. In the trial, VX-770 is being dosed as an oral therapy in patients with CF. Pending results from the Phase 2a trial, Vertex plans to advance VX-770 into a larger Phase 2b trial.The company has also initiated dosing in a Phase 1a trial for VX-809, an investigational corrector compound for the treatment of CF. The trial will evaluate single and multiple doses of VX-809 in healthy volunteers. Pending results from the Phase 1a trial, Vertex expects to initiate a subsequent Phase 1b trial in patients with CF in mid-2008.Bottom line, we are growing increasingly concerned about the delay in the Phase 3 telaprevir trial. This announcement is a notable comedown from management’s previous optimism that the Phase 3 trial would start—or at least be announced—by the end of 2007. If the delay in the start of the trial is substantial, having the results available in time to gain an FDA decision on approval by 2010 is going to be problematic. This bears close watching.
[written Wed, 09 Jan 08]
We were actually hoping to be writing this update last month, and focusing on the details for Phase 3 trials of Vertex’s (VRTX) protease inhibitor telaprevir, but obviously it is taking the company longer than expected to iron out the details with the FDA. Management did issue a press release this morning, however…actually, now yesterday morning…and here is a summary of their 2008 outlook.
The main focus remains Phase 3 for telaprevir. Management have submitted a Phase 3 trial design to the FDA, and anticipate discussing it with FDA officials later this month. The design includes 8- and 12-week regimens of telaprevir dosing as part of a 24-week treatment with all patients getting interferon and ribavirin for the full 24 weeks, plus a control arm of patients who get SOC treatment (interferon and ribavirin) for 48 weeks. They promise an update by 11 February. In the meantime, Vertex’s ROW partner, Tibotec (a subsidiary of Johnson & Johnson/JNJ), are developing a design for Phase 3 trials in Europe.
Also in the cards for 2008 is progress on VX-500, the company’s “next generation” HCV protease inhibitor. Vertex has initiated dosing in a Phase 1a clinical trial evaluating single, escalating doses of VX-500 in healthy volunteers. Pending results from the Phase 1a trial, management expect to initiate in mid-2008 a Phase 1b trial of VX-500 in HCV patients.
Additionally, another next-generation investigational HCV protease inhibitor is expected to advance from research and enter clinical development in 2008.
Also on the radar screen are a couple of cystic fibrosis (CF) candidate drugs. Vertex is conducting a randomized, double-blind, placebo-controlled Phase 2a trial of VX-770, an investigational potentiator compound for the treatment of CF. In the trial, VX-770 is being dosed as an oral therapy in patients with CF. Pending results from the Phase 2a trial, Vertex plans to advance VX-770 into a larger Phase 2b trial.
The company has also initiated dosing in a Phase 1a trial for VX-809, an investigational corrector compound for the treatment of CF. The trial will evaluate single and multiple doses of VX-809 in healthy volunteers. Pending results from the Phase 1a trial, Vertex expects to initiate a subsequent Phase 1b trial in patients with CF in mid-2008.
Bottom line, we are growing increasingly concerned about the delay in the Phase 3 telaprevir trial. This announcement is a notable comedown from management’s previous optimism that the Phase 3 trial would start—or at least be announced—by the end of 2007. If the delay in the start of the trial is substantial, having the results available in time to gain an FDA decision on approval by 2010 is going to be problematic. This bears close watching.
bhessel (92.76) Submitted: 1/25/08 2:46 AM
[written Wed, 23 Jan 08]Vertex (VRTX), one of our biotech plays, issued a press release this morning announcing the long-anticipated initiation of a Phase 3 trial for their anti-hepatitis C protease inhibitor, telaprevir. Unfortunately, there was bad news mixed in with the good, and the stock is down over 10% today and has set a new 52-week intraday low.The good news is that company management and the FDA have agreed on the basic design of a telaprevir trial, with the objective of proving the efficacy and testing the safety of 24-week telaprevir-boosted courses of treatment to replace the current 48-week standard of care (SOC), and enrollment starts in March. There are three arms in the trial: First 24-week treatment—eight weeks of interferon, ribavirin, and telaprevir followed by 16 weeks of interferon and ribavirin Second 24-week treatment—12 weeks of interferon, ribavirin, and telaprevir followed by 12 weeks of interferon and ribavirin 48-week treatment (SOC control)—48 weeks of interferon and ribavirinThe bad news is that the FDA are also insisting on an additional 48-week study “to develop additional sustained viral response (SVR) and relapse rate data with 48-weeks treatment duration that confirm results from the Phase 2 studies, thereby providing additional evidence supporting the 24-week regimen in the Phase 3 trial.” That is what Vertex says the purpose of the 48-week trial is, but it doesn’t scan for us: unless telaprevir is less effective when dosed for a longer period of time, these results would presumably favor a longer dosing. And that is bad because telaprevir’s two advantages over the current SOC are [a] greater cure rate and [b] shorter course of treatment. Take away [b] and the product would be a lot less attractive. The Phase 2 trials clearly demonstrated that telaprevir offers HCV patients an improved chance of a cure with a shorter course of treatment; don’t know why the FDA wants to test 48-week courses of treatment for telaprevir but we have to hope if the drug is as effective and safe in Phase 3 as it was in Phase 2 that the agency will approve it for use in 24-week treatments regardless of what the 48-week trial shows, and let patients and their doctors decide what works best for them. It would be weird if the FDA approved the product but limited use to 48-week courses of treatment—no one would use it—but then it was weird to reject provenge and it was weirder to reject indiplon, so who knows? It is already weird to require a pointless 48-week trial.In any event, there is worse news: management does not expect final results from these trials until mid-2010, about 12-to-15 months later than investors had been anticipating. This is probably the biggest reason the stock is selling off. Aside from the fact that the extra year of operations with no telaprevir revenue—plus the added expense of the pointless 48-week trial—means Vertex will need more cash (which probably means more dilution for shareholders), the delay appears to give all of telaprevir’s would-be competition a lot more time to mount a challenge. One hopes that the FDA will not lower the bar here for potential competitors, and if they all will face similar delays, then telaprevir's lead in the race to be first-to-market is still intact. Regardless, however, now the competition have an extra year to showcase drugs that have a less requiring regimen (one needs to take telaprevir every eight hours for eight or twelve weeks) or are more effective, so overall, risk here has increased. If telaprevir were approved today when there is no better alternative, that’s one thing, but if approval comes in three years, who knows what forthcoming alternatives may discourage HCV patients from trying telaprevir.In any event, whatever the FDA’s purpose might be in insisting on the additional 48-week trial, the worse still news is that VRTX management are still haggling with them over the design. Who knows when it will start enrolling? Under the circumstances, even management’s projection that the final results will be available in mid-2010 has to be taken with a grain of salt.This one is definitely not looking as good as it used to. Stay tuned.
[written Wed, 23 Jan 08]
Vertex (VRTX), one of our biotech plays, issued a press release this morning announcing the long-anticipated initiation of a Phase 3 trial for their anti-hepatitis C protease inhibitor, telaprevir. Unfortunately, there was bad news mixed in with the good, and the stock is down over 10% today and has set a new 52-week intraday low.
The good news is that company management and the FDA have agreed on the basic design of a telaprevir trial, with the objective of proving the efficacy and testing the safety of 24-week telaprevir-boosted courses of treatment to replace the current 48-week standard of care (SOC), and enrollment starts in March. There are three arms in the trial:
The bad news is that the FDA are also insisting on an additional 48-week study “to develop additional sustained viral response (SVR) and relapse rate data with 48-weeks treatment duration that confirm results from the Phase 2 studies, thereby providing additional evidence supporting the 24-week regimen in the Phase 3 trial.” That is what Vertex says the purpose of the 48-week trial is, but it doesn’t scan for us: unless telaprevir is less effective when dosed for a longer period of time, these results would presumably favor a longer dosing. And that is bad because telaprevir’s two advantages over the current SOC are [a] greater cure rate and [b] shorter course of treatment. Take away [b] and the product would be a lot less attractive. The Phase 2 trials clearly demonstrated that telaprevir offers HCV patients an improved chance of a cure with a shorter course of treatment; don’t know why the FDA wants to test 48-week courses of treatment for telaprevir but we have to hope if the drug is as effective and safe in Phase 3 as it was in Phase 2 that the agency will approve it for use in 24-week treatments regardless of what the 48-week trial shows, and let patients and their doctors decide what works best for them. It would be weird if the FDA approved the product but limited use to 48-week courses of treatment—no one would use it—but then it was weird to reject provenge and it was weirder to reject indiplon, so who knows? It is already weird to require a pointless 48-week trial.
In any event, there is worse news: management does not expect final results from these trials until mid-2010, about 12-to-15 months later than investors had been anticipating. This is probably the biggest reason the stock is selling off. Aside from the fact that the extra year of operations with no telaprevir revenue—plus the added expense of the pointless 48-week trial—means Vertex will need more cash (which probably means more dilution for shareholders), the delay appears to give all of telaprevir’s would-be competition a lot more time to mount a challenge. One hopes that the FDA will not lower the bar here for potential competitors, and if they all will face similar delays, then telaprevir's lead in the race to be first-to-market is still intact. Regardless, however, now the competition have an extra year to showcase drugs that have a less requiring regimen (one needs to take telaprevir every eight hours for eight or twelve weeks) or are more effective, so overall, risk here has increased. If telaprevir were approved today when there is no better alternative, that’s one thing, but if approval comes in three years, who knows what forthcoming alternatives may discourage HCV patients from trying telaprevir.
In any event, whatever the FDA’s purpose might be in insisting on the additional 48-week trial, the worse still news is that VRTX management are still haggling with them over the design. Who knows when it will start enrolling? Under the circumstances, even management’s projection that the final results will be available in mid-2010 has to be taken with a grain of salt.
This one is definitely not looking as good as it used to. Stay tuned.
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