Vertex: Breakthrough cystic fibrosis combo clears PhIII hurdle, heads to FDA

Cutting loose from the hepatitis C market, Vertex ($VRTX) bet the house on its late-stage trials for a breakthrough combination cystic fibrosis drug. And today the biotech reported that it won that blockbuster gamble, coming up with pivotal Phase III proof of efficacy that will be quickly hustled to regulatory groups in the U.S. around the world in the expectation of reaching a potentially megablockbuster market.

The results were positive, but some analysts quickly noted that the data also came in at the low end of the range needed to demonstrate success. Investors nevertheless cheered on the news with a whopping 48% surge in the company's share price.

According to Vertex all four drug arms for the two late-stage trials of lumacaftor (the CFTR corrector VX-809) and Kalydeco (ivacaftor) met their primary endpoint of mean absolute improvement for a measure of lung function called forced expiratory volume, or FEV. For patients who typically can expect to suffer a decline in FEV of 2% a year until their expected death sometime in their late 20s or 30s, there were mean improvements of 2.6% and 4.0% from baseline compared to a placebo arm. All the patients had two copies of the F508del mutation in the cystic fibrosis transmembrane conductance regulator gene.

Vertex CEO Jeffrey Leiden

"I think the important thing is the totality and consistency of the data," said Vertex CEO Jeff Leiden in an interview with FierceBiotech. Particularly surprising, he added, were the data on a drop in the rate of pulmonary exacerbations in the drug arms, which ranged from 28% to 43% compared to placebo--clear evidence backing the combo drug's ability to reduce serious events that could hospitalize and impair their target population.

In addition to the rate of pulmonary exacerbations, other key successful endpoints reached in the study included an improvement in weight and the proportion of patients who experienced a mean relative improvement in FEV of at least 5%.

There was at least one sour note in the numbers, though. A secondary endpoint for patient-reported respiratory symptoms--a sign of how well patients felt they were doing--failed to hit a statistically significant rate of improvement.

The numbers are promising, but fall short of some experts' hopes for a bigger impact. Andrew Pollack at the New York Times noted the results came in at the lower end of expectations.

"Would I have rather seen 6, 7 percent? Of course I would have," lead investigator Bonnie W. Ramsey told the Times. But if the effect they tracked lasted more than half a year, she added, patients would feel the cumulative effect of the combo.

Kalydeco is currently approved for a market that extends to about 4% of all cystic fibrosis patients. But an approval based on this new data would expand that figure to close to 50% of all patients, a huge step forward in treating the underlying symptoms of a disease that inflicts a punishing and relentless decline in health. Of all 75,000 or so patients worldwide, some 28,000 to 30,000 have this mutation profile, says the CEO. Vertex's Phase III reached patients as young as 12, a narrower group that accounts for some 22,000 patients. But investigators at Vertex are working at expanding that group in a pediatric study that would include infants.

"One of the things we believe is that if you can start treating these people at the age of two or less you can stop the development as well as progression of the diseases," says Leiden.

One of the big puzzles in the data for Leiden is why the data fell short on patient-reported symptoms. A high percentage of patients asked to be rolled over into an extension study of the drug, which will continue to track their responses, said Leiden. And that would seem to indicate that they must have thought they were doing well.

It's hard to overestimate the impact that positive Phase III data has on Vertex. Evaluate Pharma put the cystic fibrosis program at Vertex among the world's top 10 drug research projects. The FDA provided its "breakthrough" drug designation for the combination therapy. And several analysts confidently predicted that the combo would likely see its way over the Phase III hurdle--with the notable exception of Bernstein's Geoffrey Porges, who offered a bold and unusually blunt prediction of failure for the Phase III combo study just last week.

This morning, Porges conceded the point. "This result is clearly better than we had expected and than the stock had recently been discounting and should result in a significant move up in value," he noted.

Peak sales estimates for the combo stretch north of $4 billion a year. Kalydeco currently costs $294,000 a year for patients.  Even at a distinct discount over that rare-disease price, a combo for a broader patient population would be worth billions.

ISI's Mark Schoenebaum pegged the potential sales at $5.5 billion. "Bottom line: while we believe the results are not a home run, we think that the data are good and support approval," he wrote. "We expect based on these results for the stock to possibly trade at ~$100 with potential earnings in 2020 of ~$8.70 and peak sales for VRTX that could reach ~$5.5 Bn."

Company officials weren't talking about prices today, though. The next big step will be nailing down approvals and moving along a Phase II study for VX-661, their backup drug to 809. Investigators are also at work on other "correctors" aimed at amping up the drug's efficacy for a wider range of patients, says Leiden. And the plan is to get them into the clinic and on the way through a trial program, with investigators more confident than ever that what they're seeing in the lab will play out as expected in the clinic.

The company has now successfuly developed three game-changing therapies, says Leiden, adding to the confidence staffers have in their science and the prospect for more transformative breakthroughs in the future. And that helps make this a particularly significant day for all of the people who work at Vertex.

Regulatory filings are expected in the fourth quarter.

- here's the release
- here's the report from The New York Times

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