$VRTX Falls Below Buy Point On Cystic-Fibrosis Drug Data

Biotech Stocks

Vertex Falls Below Buy Point On Cystic-Fibrosis Drug Data

Shares of big-cap biotech Vertex Pharmaceuticals fell Monday after the results on its latest cystic fibrosis drug disappointed investors. Vertex (VRTX) reported data from a mid stage study combining drug candidate VX-661 with the al ready-marketed ivacaftor, branded Kalydeco, in patients with cystic fibrosis caused by homozygous F508del mutation. Vertex’s other products already treat this population, but the firm hopes VX-661 can be expanded into the harder-to-treat heterozygous F508del mutation population.

“Consistent with prior Phase 2 studies that evaluated 4 weeks of treatment with VX-661 in combination with ivacaftor, this study showed a rapid improvement in lung function within four weeks of treatment, and after patients completed treatment, lung function returned to baseline,” Vertex’s press release summarized.

But RBC Capital Markets analyst Michael Yee disagreed that it was really that consistent.

“While 4 week data is solid and in-line with prior results, the 12 week data is relatively disappointing vs. expectations because efficacy declined over the months and this has never been seen before,” he wrote in a note Monday.

The 12-week data was an average of weeks two through 12, and Vertex told analysts that the numbers actually didn’t smoothly tail off after four weeks but bounced up and down over the course of treatment. Evercore ISI analyst Mark Schoenebaum pointed out in his webinar that this was likely a product of the study being as small as it was — just 15 people were taking the drug combo — so a larger phase three study is needed to clear things up.

Still, he said that based on this, the odds of VX-661 succeeding in heterozygous patients “will have to go down.

Vertex shares fell 4% to 125.79, falling below a 127.79 buy point cleared last week. The stock hit a record 136.33 on Friday.

Yee estimated that Vertex can still rake in $5 billion a year just from homozygous cases. Most other analysts are also projecting big growth for Vertex from next year onward as the CF drugs roll out, but it’s currently losing money as a result of its former blockbuster, Incivek, being pushed off the market by Gilead Sciences’ (GILD) new hepatitis C drugs Sovaldi and Harvoni.

On a side note, Gilead fell 2% Monday after the biotech warned doctors Friday that patients taking the cardiac drug amiodarone with Sovaldi and Harvoni were in danger of heart attack.

However, analyst Yee wrote that amiodarone is an old drug used in only about 0.5% of arrhythmia cases in the U.S., so it should not have any significant impact on the drugs’ sales.


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