On Monday May 7, 2012, Vertex (VRTX) announced an interim analysis of data from an ongoing Phase 2 study of VX-809 in combination with Kalydeco (ivacaftor). The analysis demonstrated significant improvements in lung function (FEV1) among adults with cystic fibrosis (CF) who have two copies (homozygous) of the most common mutation in the cystic fibrosis transmembrane conductance regulator (CFTR) gene, F508del.
Distracted by articles filling the media aimed only at boxing VRTX in favor of those who invest against the stock, investors couldn’t continue to miss the huge news this time against a clear agreeable reality. The news is, indeed, exciting, a game changer in the treatment of diseases and, yes, Vertex will generate billions of dollars from the firm’s cystic fibrosis franchise. More important is that the self-serving distractors, we hope, might have run out of effective detergent to continue brainwashing investors, blinding them from seeing Vertex the serious innovator, the science institution, the breakthroughs’ creator and the new comer into the life sciences hall of fame.
Our enthusiasm to the news began long ago before the FDA approved its first cystic fibrosis drug Kalydeco. On Monday, June 13, 2011 more than five months prior to the approval of kalydeco (approved in January 2012) we wrote an article titled “Vertex: First Drugs ever to target the root-cause of cystic fibrosis are promising” (click here to read the article). At the time several negative articles were filling the Internet, downplaying the value of the drug, stating that it is effective only in a small percentage of patients, thus it would generate very small revenues not worthy of investors’ enthusiasm.
In the article we wrote:
On Thursday, Vertex announced data from part 1 of phase II interim study of a combination of its two drugs VX-770 and VX-809 on patients who have two copies of F508del mutation. The trials met the safety and tolerability endpoints and confirmed the success of VX-803 in moving the CFTR protein into the cells membranes. It also validates VX-770 action of boosting the function of the CFTR protein as measured by the statistically significant decrease of sweat chloride after VX-770 was added to VX-809. There were no serious or concerning side effects.” The article went further into stating, “It looks as if investors might have missed the meaning of these trials and the impact of the results on the future evolution in restoring the functions of proteins. VRTX experienced a sell-off premeditated by negative investors and analysts who looked determined to hate the results before their announcement. Premeditation was obvious as VRTX had experienced mini sell-offs during the whole week that preceded the announcement of the results. The combination, no doubt, has realized the trials’ objectives, validating the drugs’ effects on restoring the proteins’ normal functions.”
Yes, this article, which was written almost one year ago said what was denied by a flood of negative articles until yesterday’s news announcement. Those who undermined Kalydeco’s because of its small market missed the fact that this is true only when the product is used as monotherapy in cystic fibrosis patients who carry the G551D mutation. It is not the case when the drug is also used with VX-809 to treat the most common form of the disease.
The news is thrilling because the positive results validated the first drug in history to induce its efficacy at the root-cause of a debilitating life-taking disease. Cystic fibrosis kills patients before they reach 40 years of age, some would die as young as 20 years old. The good results have also validated the firm’s technological capability repairing deregulated proteins, which would open the door to bringing therapeutics that correct deregulation at the root-origin of many chronic and deadly diseases. The data suggested that Vertex could have a multi-billion-dollar franchise in treating cystic fibrosis, a life-threatening genetic disorder that affects about 70,000 people worldwide. In an article in New York Times, Dr. Joseph Pilewski, adult cystic fibrosis physician at the University of Pittsburgh Medical Center, said, “If this were to bear out in a Phase III pivotal trial it will dramatically impact the treatment options we have for patients with cystic fibrosis,” Dr. Pilewski cautioned that the data was preliminary and had not yet been fully analyzed. (Phase III pivotal trials are the last step before seeking approval.)
The article went on to say:
The combination data disclosed Monday involves patients with genetic mutations that make up about half the population with the disease. Further data expected from the study could yield results meant to help an additional 30%. The company is also testing Kalydeco as a monotherapy in patients as young as 2 1/2 years old and in patients with gene mutations not studied in its original pivotal trials. If results are encouraging, the use of Kalydeco could expand from 4% to 8% to 10% of patients worldwide, the company said.”
Vertex said the data exceeded the firm's own expectations.
What else? Do we appreciate Vertex and bet on it?
We did and we continue to do. It would be ridiculous not to bet on a favorite horse. Vertex is on its way to take place in the front row with the elite biotechnology firms and drug developers in general. With its in house technological capability and the current availability of new gene sequencers and analyzers, the firm is expected to contribute a big deal in the discovery and development of far-reaching products that are showing promise to reach as far as correcting the aberrations caused by genetic mutations in many diseases, not only cystic fibrosis.
Disclusure: We are long this firm.