Three years ago Vertex was the newly crowned king of the hepatitis C market, holding an FDA approval for Incivek, a new drug that would swiftly become the blockbuster standard of care in the market. But today, with Gilead ($GILD) elbowing aside the biotech with Sovaldi as its sales evaporate, Vertex is calling it quits on a once-ambitious R&D effort to keep a niche for itself in hepatitis C. The market, though, didn't blink, rewarding the biotech with a spike in its share price after Vertex cited some early success with a combination therapy for cystic fibrosis.
Posting a $232 million loss for Q1, Vertex ($VRTX) said it had updated its guidance on the year after deciding to "end further investment in hepatitis C research and development activities." Vertex now plans to out-license its remaining hep C drug, VX-135, according to the Q1 statement.
The company's future now rests almost exclusively on its prospects in cystic fibrosis, where it is scoring growing revenue for Kalydeco and working hard to advance a combo therapy with VX-661. The combo has been designated a "breakthrough" by the FDA, a status that could help speed development efforts. It's also absolutely essential for the company's future.
Vertex reported that a combination of VX-661 and Kalydeco in a 28-day Phase II study "showed statistically significant improvements in lung function--FEV1--in people with both the F508del mutation and G551D mutation who were already taking Kalydeco. … The addition of VX-661 also resulted in decreases in sweat chloride through the 28-day treatment period."
In a clear sign that investors long ago gave up on hep C and focused exclusively on the company's prospects in cystic fibrosis, Vertex's stock jumped 8% on the new CF data Thursday evening.
The hep C news is a big setback for Alios BioPharma, which licensed out a pair of programs to Vertex as it sought to stay competitive with the new interferon-free drugs making their way through the pipeline. After dumping one of two drugs in-licensed from Alios, Vertex had followed up with pacts to develop its drug in combinations with GlaxoSmithKline ($GSK), Johnson & Johnson ($JNJ) and Bristol-Myers Squibb ($BMY). But the FDA slapped a partial hold on the drug on signs of toxicity last year, putting the program on hold as other treatments surged to the forefront. Vertex has recently become an afterthought in the field, usually mentioned for its fast fade following the arrival of Sovaldi.
The remaining Incivek royalties, meanwhile, have been sold off.
"In 2014, we are focused on three critical objectives to support the long-term growth of our business--advancing our clinical development program in cystic fibrosis, prudently managing our financial profile, and growing our clinical pipeline to create future medicines," Dr. Jeffrey Leiden, CEO of Boston-based Vertex, said in a release. "We recognize the unique opportunity we have to develop multiple new medicines for people with CF, and with our decision to end further investment in hepatitis C, we have increased our focus on CF and are advancing key clinical studies as rapidly as possible. With a cash position of more than $1.3 billion and the potential for further growth in revenues from Kalydeco, our financial position remains strong, supporting our expanded investment in CF as well as our continued investment in research programs to create future medicines for other serious and rare diseases."
- here's the release