Bloomberg News

Vertex Drops on Results of Cystic Fibrosis Combo Drug Trial

June 09, 2011

(Updates shares in first and second paragraphs.)

June 9 (Bloomberg) -- Vertex Pharmaceuticals Inc., the drugmaker whose first medicine was approved last month, fell the most in 20 months in Nasdaq trading after results from a clinical trial for cystic fibrosis fell short of analysts’ expectations.

Vertex dropped $5.07, or 9.5 percent, to $48.07 at 4 p.m. New York time in Nasdaq Stock Market trading, the steepest decline since October 2009. Shares of the Cambridge, Massachusetts-based company have risen 37 percent this year.

Vertex reported interim results from a study testing two of its cystic fibrosis medicines in combination. The trial, from the second phase of three required for marketing approval, met goals of safety and effectiveness measured by sweat chloride, the company said in a statement. The results didn’t reach a threshold some were seeking for confidence a later-stage study would succeed, said Phil Nadeau, an analyst at Cowen & Co.

“The key question is whether such a change in sweat chloride will translate into an improvement in lung function” in the next study, Nadeau wrote in a research note today.

Cystic fibrosis is an inherited illness in which the body produces thick mucus that makes patients susceptible to infections and other problems that can kill them before age 40. Sweat chloride is an important measure because the disease is caused by mutated genes that inhibit chloride’s ability to travel across cell membranes.

The combination of VX-770 and VX-809 lowered sweat chloride by 13.2 millimoles per liter through 21 days, Vertex said. Nadeau said he was looking for a reduction of at least 15 to 20 millimoles per liter.

‘Not Enough’

The “data support further development of the program, but are not quite strong enough to serve as true ‘proof of concept’ that would de-risk a Phase III program,” he said.

Vertex’s medicines aim to enhance the function of proteins that enable chloride to move freely. Sweat chloride is a measure of how well the proteins are functioning, Vertex said.

The company reported data earlier this year on the more advanced drug, VX-770, showing it boosted lung function by 10.6 percent. Lung function is measured by the amount of air a patient can exhale in 1 second, called forced expiratory volume, or FEV 1. The shares jumped 15 percent.

VX-770 is designed for a mutation carried by 4 percent to 5 percent of CF patients. The combination with VX-809 would reach a much greater population, about 50,000 patients compared with about 3,000 for VX-770 alone, Mark Schoenebaum, an analyst at ISI Group Inc., wrote in a note to clients today.

Cystic fibrosis affects about 30,000 people in the U.S. and 70,000 worldwide, according to the Cystic Fibrosis Foundation in Bethesda, Maryland.

Vertex received approval to market its hepatitis C medicine, Incivek, May 23.

--Editors: Chris Staiti, Bruce Rule

To contact the reporter on this story: Meg Tirrell in New York at mtirrell@bloomberg.net.

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.


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