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Vertex Pharmaceuticals Incorporated Message Board

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  • thirdmeinvestor thirdmeinvestor Jun 6, 2007 8:32 PM Flag

    Fall unnecessary

    Expenses related to running clinical trials are huge. The total expense including R&D reached 430 million last year. But at the end of last year VRTX had 770 m liquid assets (check this figure). Obviously, it is important to bring the drug to the market as soon as possible in Europe. There will be milestone payment from J&J. Read the following from last year's contract with J&J.:
    -----------------------------------------------------
    Key Financial Terms:

    Upfront and milestones: Vertex expects to receive a total of $545 million in payments, including an upfront payment of $165 million upon signing the contract, and a further $380 million in additional contingent milestone payments based on the successful development and approval of VX-950, and launch in the regions where Janssen Pharmaceutica has commercial rights.
    Royalties: a tiered royalty averaging a mid-20 percent range of net sales in Janssen�s regions and contingent upon successful commercialization. In addition, Janssen will be responsible for certain third party royalties in its regions.
    Drug development costs: reimbursement of 50 percent of drug development costs incurred by Vertex.
    Commercial supply responsibilities: Vertex and Janssen will be responsible for drug supply in their respective territories.
    Mitsubishi Pharma holds development and commercial rights to VX-950 in Japan and certain Far East countries, and is expected to commence clinical development in its territories in the second half of 2006.
    =========================================================
    Ph III trials should be run in a semi-individualized system, if the FDA allows it. Geno 1 patients who show persistent early response should stop with 12+12 schedule (I speculate a majority belongs to this group), but patients who show slow response have to receive 12+36 or longer schedule. This will take the entire year of 2008.

    A bright spot: Note that PROVE 2 running in Europe does not have the 12+36 wk arm. Europeans and others respond well to SOC while Black and Hispanic Americans don't. I suspect triplet combo 12+12 arm of PROVE 2 may also show higher SVR rate than PROVE 1(95% of Black patients belongs to geno 1 while only 70% of white patients does, and the SVR rate from SOC is only 19%). On the other hand, because SOC alone gives 54% SVR rate for the white geno 1 patients, PROVE 2 trial has a higher bar to clear. However, the advantage of 12+12 regimen over SOC is about 40% at the end of treatment (85% vs. 43%, including dropouts), this benefit will be maintained in a longer trials such as in the 12+36 regimen. In any case the Street has very low expectations now, and that disconnection will power this stock higher when the data are released.

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