Vertex Is Ready To Rise On Incivek Success

| About: Vertex Pharmaceuticals (VRTX)

News for Hepatitis C sufferers has taken a turn for the better as Vertex Pharmaceuticals (NASDAQ:VRTX), as well as several other companies, continue to make excellent headway in treatment.

Recently, the media announced that Vertex's Hepatitis C drug, INCIVEK, was successful in curing 100% of patients suffering from the IL28B CC genotype. This is based on the successfully completed phase two trials of the drug. Patients that were cured were new to treatments and were treated with an INCIVEK (telaprevir) tablets, pegylated-interferon and ribavirin combination. Vertex is working toward developing the drug to a point where it will culminate in a cure in no more than 12 weeks for people with the specific IL28B CC genotype. Phase 3b studies are currently underway in order to test this and these trials are being supported largely by the success of the phase two trials. The hope is that speedy cures for hepatitis C sufferers with other genotypes will soon be found. There are also studies currently underway involving patients suffering from both Hepatitis C and HIV simultaneously.

Phase 2b trials are also being opened to people with genotype 1 (1a and 1b) Hepatitis C. The drug that will be tested is an oral medication. Vertex is working towards investigating more and more uses for the drug as well as aiming to reduce the time needed to cure Hepatitis C completely.

As with all drugs, there are some side effects that investors will need to be on the lookout for. The most common are fatigue, itching, nausea, diarrhea, vomiting, anal or rectal problems, and taste changes with the most serious being rash and anemia. None are reported to be that serious, but of course, it only takes one. Investors will want to be sure none of these become serious enough to drive sales down.

The implications of a drug with this success rate on Vertex stock should be obvious. With the success of the testing process, we saw a sharp rise of nearly 5% in the company's share price. Although there are other new hepatitis C drugs on the mark, the competitive advantage of INCIVEK is the vastly reduced treatment time. The drug is able to cure Hepatitis C in about half the time of most other existing drug. In addition, the medication only needs to be taken twice, rather than three times per day. This makes it the more convenient option for Hepatitis C sufferers and consequently Vertex stock are strong currently. Look for this trend to continue unless interrupted with bad news concerning the treatment.

However, Vertex may be up against some steep competition. Bristol-Myers Squibb (NYSE:BMY) and Gilead Sciences (NASDAQ:GILD) have each produced drugs which together are effective at curing Hepatitis. GS-7977 from Gilead and ribavirin from Bristol are reported to suppress the Hepatitis C virus in most patients who took part in the study within in four weeks following the completion of the treatment regime. The actual percentage of patients cured by the drug was over 85%. Like the Vertex drug, the new drug from Gilead and Bristol also does away with the need to use injectable medications. The move towards oral medications in the treatment of Hepatitis C is a very important step indeed. Each company working toward achieving the change will most likely enjoy success I sales.

Due to the success of its Hepatitis C drug, Gilead also experienced a jump in shares of 12% and Bristol shares increased too. Despite the competitive edge that Vertex has with its drug, it seems that, at present, Gilead and Bristol are leading the race in the Hepatitis C market.

There is one problem facing Gilead and Bristol, though. The cure for their Hepatitis C drug depends on both drugs from both companies. The companies are far from having decided to collaborate and it seems to many that this particular cure may never reach the market, putting Vertex back in the leading position in curing Hepatitis C. An ideal situation would have these large companies working together for the sake of those inflicted. However, the industry does not work like that and if Bristol and Gilead are not able to come to terms, it may mean sufferers have nowhere else to look beside INCIVEK.

Another company involved in the race for orally-taken Hepatitis C cures is Abbott Laboratories (NYSE:ABT). Phase two tests of its drug on genotype 1 found that "treatment-naive patients taking ABT-450/r and ABT-072 combined with ribavirin administered for 12 weeks achieved sustained viral response at 24 weeks". This means that Abbott is closer to achieving a cure for genotype 1 sufferers than Vertex is. Although Vertex has achieved significant results with its new drug, there is unfortunately a lot of competition in this particular area at present.

Other Vertex competitors have also found a way into the news recently. Merck (NYSE:MRK), for example, recently were made to pay $321.6 million for illegally marketing a drug called Vioxx. Vioxx was released as a painkiller, but was removed due to its high correlation with heart disease. The investigation, which has been ongoing for seven years, finally reached its conclusion, but the long-term ramifications of such negative press for the company can be clearly seen in its stock price fluctuations.

Competitors Pfizer (NYSE:PFE) and Amgen (NASDAQ:AMGN) are in the process of winding down a partnership that lasted for many years. As the relationship fades, Pfizer will begin delegating the responsibility for the marketing of the anti-inflammatory drug Enbrel to Amgen. Amgen will then continue to be the responsible body for the drug over the years to come.

As with most drug companies attempting to release a new drug, Vivus is in a race. If it can beat out Abbott to provide Hepatitis C treatment for a wide range of sufferers, expect great sales figures. The hype around Vertex's new drugs may be real or not. Only time, more tests, and consumer preferences will tell.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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