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Vertex Pharma's CF Drug Outperforms

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Vertex Pharmaceuticals Inc.’s (VRTX) share price jumped 55.36% following the release of positive interim data from a mid-stage study of its combination therapy - VX-809 and Kalydeco (ivacaftor). The study is evaluating adults with cystic fibrosis (CF) who have two copies (homozygous) of the most common mutation in the CF transmembrane conductance regulator (:CFTR) gene, F508del.

The 56-day study data compared 37 homozygous F508del patients who were treated with the combination drug with 11 patients with one or two copies of the F508del mutation treated with placebo.

Interim data from the study revealed that while 46% patients in the VX-809 plus Kalydeco arm experienced at least 5% absolute improvement in lung function from baseline, 30% patients in the cohort experienced at least 10% absolute improvement. However, none of the patients in the placebo arm achieved 5% improvement in lung function from baseline.

Vertex Pharma plans to report the complete data from the study in mid-2012. Following these results and discussions with regulatory agencies, the company plans to initiate a pivotal study of VX-809 and Kalydeco in patients with two copies of the F508del mutation.

We believe that if the combination therapy manages to clear the regulatory hurdles and hit the markets, then the top-line at Vertex Pharma will be boosted.

We remind investors that Kalydeco was approved in the U.S. in February 2012, for treating CF patients above 6 years of age. Vertex Pharma is also seeking approval of the drug for the same indication in the European Union with a response expected in late-2012.

We currently have a Neutral recommendation on Vertex Pharma. The stock carries a Zacks #3 Rank (Hold rating) in the short-run.

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