| Author | Message | ||
     Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3595 Registered: 05-2011 Posted From: 172.58.168.25 Rating: N/A |
Vertex Pharma is feeling under the weather today after halting development of VX-864 (194.77 -22.00) Vertex Pharmaceuticals (VRTX -10%) is feeling under the weather today following the company's announcement that it will halt the development of its rare lung disorder (AATD) drug VX-864. The results from its Phase 2 proof-of-concept study provided proof-of-mechanism. However, the magnitude of treatment effect was determined unlikely to translate into substantial clinical benefit. As a result, Vertex will only advance development of its small molecule correctors, which showed increased plasma levels of functional AAT (a type of protein). We view Vertex's decision not to proceed with VX-864 as a bit of a surprise for investors, given early results from the drug and prior statements from Vertex. We suspect investors were anticipating that VX-864 would advance from Phase 2 given the prior failure of Vertex's other AATD treatment: VX-814. This drug was abandoned after its Phase 2 trial in October 2020, resulting in a 20% plunge in its stock price. Early findings in mice for VX-864 showed a sixfold increase in functional AAT (fAAT) levels vs VX-814's 4.8-fold. Given these initial results, we think investors were optimistic that Vertex had a better chance of advancing VX-864. Vertex also noted on its Q1 earnings call in late April that there must be three things to consider VX-864 a success: safety, dose-response relationship, and elevated fAAT levels. VX-864 was well tolerated and demonstrated a highly statistically significant increase in fAAT levels, making it surprising to investors that the company is now choosing not to proceed with the drug. Finally, Vertex was one of many pharmaceutical companies developing treatments for AATD. Arrowhead Pharmaceuticals' (ARWR +4%) project ARO-AAT has already demonstrated robust clinical results and has a Phase 2/3 study that is currently further along than was Vertex's drug. ARWR is trading higher today on Vertex's announcement. We think that even if Vertex had advanced its AATD drug, it would have still faced stiff competition from a company with an AATD drug already further along in its clinical studies. Overall, investors are surprised by the decision not to advance VX-864, especially given earlier results. In addition, with Vertex discontinuing VX-864, it is unclear what drug will be added to its pipeline to treat AATD. Even with many other drugs in the pipeline for Vertex, the abandonment of VX-864 is still a significant loss for the company because investors have been hoping Vertex would broaden out beyond cystic fibrosis (CF) treatments. On a final note, Vertex still has a robust pipeline of treatments for CF, with four of its six clinical studies in final stages. Its CF medicines have helped drive Q1 revenue of over $1.7 bln. However, we think it's crucial that Vertex diversifies from its success with CF, and in its VX-864 was the potential to do just that. Lastly, given that Vertex's stock has yet to recover after halting its prior AATD drug, we suspect it will take some time for Vertex to recover from its latest loss |