Better than expected results are announced from phase 3 randomized,
double-blind, placebo-controlled ADVANCE study with Vertex’ hepatitis C
drug telaprevir. Around 1,095 patients suffering from the genotype 1
chronic hepatitis C virus took telaprevir, which has tremendously
increased the cure rate at record treatment duration. Many liver experts
considered this news a historical advancement in the management of
progressive disabling, life-threatening and sometimes deadly chronic
hepatitis C viral infection. First, the drug deals directly with the
virus and, second, it wipes it out in a short limited time. The good
news will be hailed by 3 millions people infected with the virus in the
U.S. and by 170 million worldwide if they hear the news.
Telaprevir’s trial results demonstrate that 75% of chronically infected
patients with genotype 1 hepatitis C virus (HCV) who had not previously
been treated achieved a sustained viral response (SVR or viral cure)
after receiving 12-week telaprevir-based combination regimen followed by
the conventional drugs pegylated-interferon and ribavirin. A slightly
smaller number, 69%, of patients, achieved the same results after a
8-week treatment with the same regimen. On the control arm, where the
conventional treatments pegylated-interferon and ribavirin were given
alone without telaprevir, only 44% achieved viral cure, but only after
48 weeks duration, i.e., four times the treatment duration with
telaprevir. These results are better than scientists’ expectations,
including those responsible for developing the drug.
Considering the debilitating and life-threatening nature of HCV
infection, one can imagine how precious telaprevir must be regarded by
liver specialists who watch their HCV infected patients suffer
progressive liver deterioration and general worsening of their general
health. For years they witnessed patients horrified from the possibility
of developing liver failure, liver cancer and from death. That’s what
HCV causes. Escalating complications beginning with liver inflammation,
liver scarring, liver cirrhosis, and, possible liver failure, and
sometimes, liver cancer and death.
The trial results, no doubt,
have increased our confidence that telaprevir will be the first
protease inhibitor to reach the HCV market. Other large pharmaceutical
and small biotechnology firms are also developing HCV drugs, yet, their
investigational drugs are still in early and mid-term trials. A protease
inhibitor, boceprevir, developed by Merck is in late phase trials. The
results are expected to be unveiled before the end of the year. (For
other small biotech firms developing HCV drugs go to Prohost Letter
#302.)
Reaching the market earlier than other HCV products
enables Vertex to capture a large part of the market and keep it. Some
financial institutions believe that telaprevir could generate $3B in 2-3
years. Others expect larger revenues from the drug sales based on the
fact that physicians would like to rid their patients from the virus as
soon as possible. Many are convinced that the ideal regimen will be a
combination of old drugs with the new protease inhibitor from beginning
to end. For a more accurate speculation, however, we believe we should
wait for the guidelines when issued to telaprevir’s providers. We must
also wait for Vertex to put its price tag on the drug.
Vertex
expects to file a New Drug Application (NDA) to the FDA for approval in
the second half of 2010 for both treatment-naïve and treatment-failure
patients. Vertex plans to launch the drug in the US in 2011.
The results and the fact that telepravir combination will be given
during a shorter time than the conventional drugs are big deal for HCV
patients and their physicians. The short treatment duration encourages
compliance, which is extremely important for halting the progression HCV
complications into liver failure and cancer. Good news also is that we
have witnessed a convincing increase in compliance during the numerous
trials conducted with with telaprevir. The results represent a huge
victory against the nasty HCV virus.
VRTX is selling at less
than $35 with a market value of around $7B. This amount is supposed to
reflect the Vertex’ expected revenues from telaprevir (drug is
partnered), the royalty payments of Vertex’ marketed HIV drug, and a
pipeline that has several investigational drugs, which include: A
product for cystic fibrosis in phase 3 trials; three products in phase 2
trials (not partnered ) for HCV infection, inflammatory diseases, and
epilepsy; two products for cystic fibrosis (partnered) in phase 2
trials; and 2 other HCV products (not partnered) in Phase 1 trials. The
pipeline has another product in early development for cancer. We
believe the stock is worth much more than its current price. We hold a
long position on VRTX with a near-term target $50.
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