Summary/Thoughts on CF discussion from recent Jaffray conference
1. Expanded Labeling for 770: Vertex noted that its recent discussions with FDA re expanding label have been very productive and that by early 2012 it will begin testing on other Group 2 (mutations where there are some channels on the cell surface) and anticipating expanded label by early 2013. Vertex stated that expanded label could double the population size for 770.
a) News of agreement with FDA I expect shortly which “should” move stock higher.
b) I was shocked that Vertex said that it would “double” the population size for 770. That is only 8-10% then, while I had thought 12% was a conservative population size which would benefit, with 20% the max. Time will tell.
2. In discussing 809/770 combo, Vertex noted that in the original study (2 week 770 solo, followed by 1 week 809/770 combo), that 20%-30% of those on combo had a greater than 20 point reduction in SC.
a) I knew that some of the participants had that high of a reduction, but had no idea that it was such a high percentage who had a 20 point reduction and that was based on a shorter (and lower-dosed) trial. Makes me think the higher dosing and longer time frame might bring SC for larger percentage of participants into the “border-line CF” range.
3. Vertex stated it thinks the Part II 4+4 week length will be long enough to see both improvement in FEV and SC. Vertex expects initial results in mid-2012 and assuming improvement and continued safety then they’ll be looking to open it up.
a) Based on 770 in vitro, I think they probably have a good sense of how long they need for the benefit to plateau.
b) Not much longer to wait to get a sense for whether 809 is going to work and make it to Phase III. I’m thinking now Vertex might continue with 809 to Phase III, even if 661 shows better results.
4. The presentation was really more of a Q&A as someone else noted.
a) I thought this was one of the most informative of conferences because the person introducing/questioning Vertex was very well informed and didn’t start with “can you tell us a little bit about Vertex.”
b) One thing the questioner noted which I found of interest was that he had attended the recent CF conference and left Vertex’s presentation on 809 convinced the combo would work. Not sure exactly what else was said in that presentation, but that was hopeful for me.
In addition to the excellent summary of the CF info from the Piper Jaffary conference by Verityvoila, there were a number of other remarks made by the senior biotech analyst at Piper Jaffary and Ian Smith that were interesting. First, this analyst has had an "outperform" rating on Vertex for the past year and seemed to have a favorable bias. He started by saying "what a year for Vertex" and went on to note the Incivek approval and record launch. Then he said "but the stock has been languishing" and "we are not ready to throw in the towel on the HCV market yet." He went on to say they are "most excited about Vertex CF programs" and "shares could revisit those highs of 50 dollars driven by CF...which I think fundamentally could dwarf the size of the HCV market."
Ian Smith said they saw no change in the prescribing habits by treating physicians. He noted that new HCV therapies are "a number of years off." He also said when asked about "warehousing" of patients that he did not expect this until there is data on safety and efficacy in genotype 1 patients "which is a year or so away."
Smith was asked about Incivek revenues from Japan and europe. His response was that there were no royalties from the Japanese market but there would be a milestone payment which would be announced at the next conference call in 2012. He said he expected a "mid 20 royalty" from european sales (I assume he meant mid 20 percent.)
Smith talked about the oral regimen (Incivek/VX222/ribavirin) in phase II testing for GT1 patients and said there would be "interim data at week 12." He went on to say they "might be able to move very quickly to a registration study" for the 3 drug all oral regimen. He also said the "data will come shortly" and they would have data for both GT1A and GT1B subtypes. He said they expected to start "combination studies" with the Alios nucs in the "latter part of 2012."
Smith discussed the hepatitis C subpopulations including the harder to treat patients and said Vertex was working to expand the label for these subgroups. He said there was no data yet from other pharma companies regarding treatment regimens for these patients.
Smith ended the HCV discussion saying that he expected a "highly fragmented market in the latter part of this decade" and that Vertex was "trying to target different pieces of this market."
The Piper Jaffray analyst said he recently attended the North American CF meeting with Vertex and several investors. He said "2012 is going to be all about CF for Vertex." Regarding Kayleideco and the G551 mutation, he said of the physicians attending the conference "these docs have religion is really the only way I can explain it."
Overall, I thought CFO Smith's presentation was very good. He seemed confident about Vertex strategy with respect to the HCV market and I did not detect any hint of panic. I also heard no misleading statements or smoke and mirrors.
The Piper analyst seemed more enthusiatic about the Vertex pipeline than Ian Smith did. Perhaps management does not want to crow until they deliver results, but I think that at least this analyst sees the current stock price weakness as a buying opportunity with positive clinical trials turning sentiment back in favor of VRTX as it's pipeline gets positive news next year.
This is a super duper job. The audio was poor but you precisely caught them all. You've done a great service to the board.
The PJ analyst is Ted Tenthoff. He is better than 10 other analysts put together.
Verti! NICE JOB! This is excellent info. Thank you!! And, based upon the #'s suggested below, I would agree that VRTX would keep marching forward with 809 in conjunction with 661 studies! Well done.