Any day now Vertex will be announcing preliminary results from combo study of 770/809.
1) Results will show improvement in sweat chloride--statistically significant, but not substantial.
2) Vertex will announce it is not moving forward with 770/809 combo trials, but is focusing on 770/661 combo and another corrector modifier.
3) Stock price will drop $4-6.
Buying more on dip.
1) Dropping 770/809 is not bad news because 661 is a better corrector and is nearly at the same point in the trials.
2) Vertex knows what they are doing with small molecules and the $75M from CFF to expediate these drugs ($25M for 661 and $50M for other correctors) shows that this is the "cure" (until England's gene therapy research pulls forward.)
3) This isn't a short-term pay-out, but within 5 years the revenue stream will be beyond the most optimistic predictions.
Your analysis is much better than my original one and you have me convinced. I am shocked though that 10 for a change is enough to justify pushing forward. I do know, though, that 661 has better in vitro results, but that said what you said makes alot of sense. Thanks for sharing.
Thank you for your input to clarify many points. Does Peter Mueller's 10 or greater mean >10 mmol/L? I was not sure what he was talking about at the time, but now I know that it must be 10 mmol/L. I think that the combo will show a synergy and give a 20 mmol/L reduction, recapitulating the in vitro data. The dosing lasted only 3 weeks, but the time length must be long enough to detect their safety and efficacy.
Knowing the market potential of 770 and 809, I think that VRTX is one of the most unappreciated and most undervalued stocks in Nasdaq.
At most recent first quarter conference call, Peter Mueller, during the Q&A answered at few questions being debated her today:
1. What level of drop in sweat cholride would be considered sufficinetly positive to move ahead with development of VX 809? His answer 10 or greater.
2. What advantages have been demonstrated that VX 661 has over VX 809 that makes it a viable next choice?
Answer: Better penetration into lung tissue, but this does not necessarily correlate with superior efficiacy in sweat chloride measurements or clinical improvement in patients.... that's why they intend to pursue the study... (to see which drug appears to work the best in the various CF mutations)
Remember, at this conference call, the point was made that the VX 809/VX 770 interim data about to be released were proof of concept data, looking only a one week of combined dosing to see if the biomarker of sweat chloride showed enough improvement to justify pursing a longer duration clinical study with escalating doses of VX 809 to optimize results in the patients with the most common CF mutation. Given the limitations of the study about to be released, any sweat cholride decrement greater than ten will likely be viewed as "positive results" and justify the next round of clinical studies with 809 and a potential registration path if clinical improvements (i.e. improved FEV-1, weight gain, fewer hospitalizations with infections, enhanced quality of life measurements etc.) are realized, even if they are not quite the same improvement found with G551D patients receiving VX 770 monotherapy. Any incremental imporvement in the above clinical parameters would be sufficient to push forward for an NDA, and only if "better" results from VX 661 are realized, would VX 809 be replaced. In the meantime, Vertex is smart to development "next generation" correctors to see if can be the only real player in this field, by optimizing treatment for CF patients in as many mutaitons as posssible. The market's reaction will be liely a good one for any real postive resutls, but the bottom line is what the analysts factor in to their projections of future revenues, and the opportunity to treat ten times as many patient's with CF is certaily not priced into the current pps.
Verity, you have a good point. I've read the April 7 PR many times, but I cannot find that 661 cleared safety hurdles and was better than 809 in efficacy in vitro. Vertex will develop both drugs until it is clearly shown clinically that one is better than the other in all patients in both efficacy and safety. It is possible that each has more satisfactory side effect profile with certain group of 508del patients. In this case, both drugs, 809 and 661 will be developed. Vertex has forthcoming financial resources to develop both drugs. Potential rewards from the success are so huge that a possible excess may be justified.
I'm going to go out on a limb and say the results will be significant and "substantial".
In the phase 2a trial of VX-809, both the 100 mg and 200 mg doses gave significant reductions-- 8.2 mmol/L at 200 mgs. (http://investors.vrtx.com/releasedetail.cfm?ReleaseID=442429)
In phase 2 and phase 3, VX-770 showed reductions in excess of 40 mmol/L.
So I would guess the combo gives a 15-25 mmol/L drop. It could go above or below that, but assuming that baseline, I think there's a decent chance investors are pleasantly surprised by the results. Which makes me think we're most likely flat or modestly up on the announcement.
I'd still say it's 50-50 on whether they advance 809 and 661, or just 661. Either way I think the odds are very good that a corrector does make it to market on top of VX-770, which should give us a big run up over the next few years.
You are right again. I would think that if the sweat chloride drop is 20 mM or higher, the share price would make a quantum jump. The CF trials have so far mirrored the in vitro results very well.
Your link did not open, and posted again here.
Sounds reasonable. Not sure if 809 will be dropped by 661, maybe or maybe not. It is possible that they may try to differentiate them as two products, they may show distinct activity for various CF patient populations (genotypes).
Also, regardless of the data, I think WS is not counting on "combo" revenues for future earning calculations and target price. So the downside potential -if the clinical data is not good- will be very limited and transient. The upside potential if the clinical data is good is very large.
I really hope it works, because it is the only way to justify further stock appreciation in the next 6 months. Unfortunately I don't think it will. My prediction is the clinical data will not be statistically significant, and VRTX will drop future development not because of 661 but because 809 data would not justify further investment in this combo.
that was my original thought--661 and 809 affect double-deltas and heter 809 differently, but after CFF call, I don't think that's the case. rather, 661 has been in vitro results on protein folding. es WS really not value stock based on pipeline probability potential?
There is a potential competitor in the CF corrector space. But, since its progress was not mentioned in the last CF Foundation seminar, it may not be a serious competitor.
If you cannot open the link above, let me know. I can copy and paste the highlights.
>>1) Results will show improvement in sweat chloride--statistically significant, but not substantial.<<
Hard to comment here since you don't define substantial. I don't think they will drop it, just try higher dose unless it shows no effect. A modest effect, they up the dose. Great effect they may go ahead as is but think they'll try a higher dose anyway.
Don't think it will drop $4-6 if comes in as you claim. Maybe $2-3.
Lastly 661 is a year behind 809. That's a long time in this game.
Is it really a year behind if 770/809 needs to do a re-dosing at Phase 2A?
770 was said to be statistically significant but not substantial by the dr after the results. I think these results will be similar--probably better than 770's decrease in sweat chloride, but not enough to take the definite CF diagnosis to a "borderline" as 770 did with 551.
Don't you think with the drops post FDA approval for HEP meds, that a higher drop is in store with an announcement of what the market will take as bad results from a combo trial?