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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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