Vertex shares slide after FDA slaps partial hold on hepatitis C drug

Vertex Pharmaceuticals ($VRTX) has suffered a setback in the race to advance new oral drugs for hepatitis C virus. The FDA placed a partial clinical hold on U.S. development of a 200 mg dose of VX-135 after three patients in a European study showed signs of liver toxicity after taking 400 mg doses of the compound, Vertex spokesman Zach Barber confirmed via email.

The Cambridge, MA-based company's shares fell by about 9% in after-hours trading as of 6:00 p.m. ET.

Vertex is conducting ongoing midstage studies of VX-135, a nucleotide analogue polymerase inhibitor licensed from Alios BioPharma, at a 100 mg dose in combination with ribavirin in the U.S. The clinical hold does not apply to the 200 mg dose outside the U.S. and overseas studies at the 200 mg dose are ongoing, according to the company.

Of the three patients with elevated liver enzymes, a classic indicator of toxicity, one of the patients suffered what is considered a serious adverse event, Barber said. All the patients returned to baseline levels of liver enzymes after stopping treatment.

It's unclear how the partial clinical hold will impact Vertex's standing in the hepatitis C race. ISI analyst Mark Schoenebaum pointed out in a note to investors that the hold could slow development of the compound, for which his firm projects peak annual sales of $900 million. Vertex is already behind companies in late-stage development of rival hepatitis C regimens such as AbbVie ($ABBV), Bristol-Myers Squibb ($BMY) and Gilead Sciences ($GILD).

Vertex also noted that the company and GlaxoSmithKline ($GSK) decided in June to ax their collaboration to develop VX-135 and GSK-2336805 for hepatitis, saying that the companies plan to "prioritize" other programs. Barber said that the decision to end the collaboration was unrelated to the clinical hold.

In search of effective combination therapies against the liver-damaging disease, Vertex has formed alliances with Glaxo, Bristol-Myers Squibb ($BMY) and Johnson & Johnson ($JNJ). The companies and their rivals aim to grab a share of the projected $20 billion global market for drugs against the disease, which is a leading cause of liver cancer.

A sign of rapid change in the hepatitis C field, Vertex was the darling of the market after the 2011 approval of its drug Incivek, which rapidly achieved blockbuster status. Yet patients on the drug also need to take injections of interferon, which causes flu-like side effects, and sales of Vertex's drug dropped after interferon-free regimens from Gilead and others showed dramatic results in trials.

- here's the release  
- and Bloomberg's coverage

Special Report: Hep C pill race report 2012: Gilead, others rush toward pharma gold

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