Vertex Stock Rises on Cystic Fibrosis Results

Updated from 11:50 a.m. EDT

Vertex Pharmaceuticals(VRTX) said Thursday that its compound targeting the underlying cause of cystic fibrosis was successful in increasing lung function in the interim analysis of a small midstage study.

The company plans to move forward with developing the drug, marking new territory for Vertex, long known as a developer of Hepatitis C treatments. Shares recently were jumping $1.61, or 9%, to $19.44.

Vertex said its VX-770 significantly improved lung function in patients with a genetic mutation specific to cystic fibrosis in a 14-day study.

Cystic fibrosis is caused by a genetic mutation that results in a malfunctioning or missing protein on cell surfaces, which in turn results in an imbalance of salt and water.

Current therapies treat the disease by managing symptoms caused by the salt-to-water imbalance, such as restricted airflow. But Vertex's compound, VX-770, directly targets the missing or defective protein, the underlying mechanism of the disease.

CF patients typically have a 1%-2% decline in lung function each year, according to a standard measurement. By the same measurement, patients in the VX-770 arm of Vertex's phase II-a study saw a statistically significant 10% increase. Patients in the placebo arm, in contrast, had a 1% increase.

The compound also affected other hallmark indicators for the disease, such as sweat chloride levels, which decreased in patients who were treated with VX-770.

"While these are early data, it is unprecedented for an investigational oral compound for the treatment of CF to have such a marked effect on multiple measures of CF disease activity," said Frank Accurso, director of the Cystic Fibrosis Center at the University of Colorado School of Medicine in Denver, in the Vertex release.

The company said the drug was well tolerated and adverse events were similar between the arm taking VX-770 and placebo.

In a note to investors, Summer Street Research's Tony Caserta called the data very positive, although the timelines and market potential are unclear. "Nevertheless [it's] a scientific and clinical breakthrough that could treat the underlying gene defect. No approved CF medications do that."

The company now plans a second part of the phase II trial, which will enroll about 16 patients for 28 days, beginning in the second quarter. Vertex said it will also meet with regulatory authorities and cystic fibrosis investigators to find the most rapid path forward for the compound.

It will present the details of the 20-patient study at an upcoming medical meeting. Summer Street's Caserta noted that while the big cystic fibrosis meeting is in the fall, he believes the company will want to get the data out earlier.

Know What You Own: VRTX operates in the drug manufacturers industry, and some of the other stocks in its field include Abbott Laboratories(ABT), Bristol-Myers Squibb(BMY), Merck(MRK), Sanofi-Aventis(SNY), Eli Lilly(LLY) and Pfizer(PFE). These stocks were recently trading at ($53.99, -0.07%), ($21.41, +0.99%), ($44.63, -0.16%), ($37.06, +0.76%), ($50.66, +0.94%) and ($20.68, -0.05%) respectively. For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.

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