MINYANVILLE ORIGINAL Vertex Pharmaceuticals
(VRTX) stock surged almost 50% Monday after the company said
a combination of two drugs helped cystic fibrosis patients’ lungs work better in a study. If the positive results hold up after additional testing, it’s a significant development that potentially increases the likelihood of approval for the drug combo and raises expectations for potential sales.
Shares of Vertex rose 47% to $55.10 in midday trading Monday. That’s a major jump for a company that already had about an $8 billion stock market value.
Vertex, which last year began selling a new hepatitis C treatment, said its drug Kalydeco (approved earlier this year) combined with an experimental treatment, VX-809, greatly improved lung functions in adults tested.
In January, Vertex won approval
to sell Kalydeco to treat a small population of cystic fibrosis patients with a particular genetic defect. If approved, the combination therapy would greatly increase the number of patients eligible to take the treatment. About 30,000 people in the US and 70,000 people worldwide have cystic fibrosis, a life-threatening disease.
The market for Vertex’s combined therapy is at least $4 billion a year, ISI Group analyst Mark Schoenebaum says. Vertex would likely have to cut its almost $300,000 a year price tag for Kalydeco so it can sell to a larger group of patients, Schoenebaum adds. (Drugs aimed at small patient populations often carry eye-popping prices so the companies can recoup their costs.)
The company is accelerating its plan to push for market approval for the combined drugs, new CEO Jeffrey Leiden told a conference call Monday.
The company hopes to start a pivotal study of the drugs later this year or early next. That would probably push a possible US market approval to sometime in 2015.
Vertex is a profitable company following the approval last year of Incivek for hepatitis C patients. Leiden says the company is committed to sinking profit from its existing drugs into its developmental products like the cystic fibrosis therapy. “This is more proof of that reinvestment,” he says of plans for the upcoming pivotal study.
Vertex also is in a race to develop a next-generation hepatitis C drug. Like hepatitis C, cystic fibrosis represents a need in the market for better treatments. An inherited disease, the condition
is characterized by a thick, sticky mucus that builds up in a person’s lungs and digestive track. The average life expectancy of a cystic fibrosis patient is about 38 years, Leiden says.
“In many ways cystic fibrosis really exemplifies what Vertex is all about,” Leiden says, referring to the concentration of drugs for unmet medical needs.
No positions in stocks mentioned.
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