Vertex Investors Balk at New Study Plans

A speedier-than-expected regulatory filing for Vertex Pharmaceuticals' (VRTX Quote) hepatitis C drug appears less likely after the company disclosed plans Monday for a new phase III study of the drug.

Investors have been hoping that Vertex and partner Johnson & Johnson (JNJ Quote) could seek regulatory approval for telaprevir in 2009 based on data from existing clinical trials in treatment-resistant patients.

However, the companies posted details of a new phase III study of telaprevir in treatment-resistant hepatitis C patients on the ClinicalTrials.gov Web site Monday. The disclosure dampened investor outlook for a quick telaprevir filing.

If Vertex cannot file telaprevir with the U.S. Food and Drug Administration in 2009, the filing will likely come in the second half of 2010 after studies of the drug in treatment-naïve hepatitis C patients are completed.

Vertex shares fell 5% to $31.66 Monday as a result.

"We have learned that telaprevir's phase III study in treatment experienced hepatitis C patients is different from PROVE 3 and study 107, which in our view decreases the chances of an early filing," wrote Citibank analyst Yaron Werber in a note to clients Monday evening. PROVE 3 and study 107 refer to the existing telaprevir studies in treatment-resistant patients.

Werber has a hold rating on Vertex, and perhaps echoing the sentiment of his momentum and catalyst-driven hedge fund clients, he added that, "We are no longer warming up to the stock and believe the momentum has cooled off as we believe that the chances for an early approval on PROVE 3 and 107 are low."