Vertex Nears Hit or Miss

Looking further ahead, expect additional data at the Digestive Disease Week conference May 19 to May 24 in Washington, D.C., and the American Association for the Study of Liver Disease annual meeting Nov. 2 to Nov. 6 in Boston. (Mark your calendars.)

Vertex's stock has been weak since December, when shares were trading above $44, in part because the release of the first slug of data from PROVE 1 proved a bit disappointing to some and also raised the specter of unacceptable toxicity.

After 12 weeks of treatment, Vertex reported that 88% of patients on a telaprevir-containing arm had undetectable levels of the hepatitis C virus in their system, compared with 52% of patients in the control arm. But when these results were adjusted for the 9% of patients who dropped out for adverse events, the undetectable rate in the telaprevir arm was reduced to 80%, below the 90%-plus rate that many investors were expecting at this stage of the trial.

A higher-than-anticipated dropout rate due to toxicity was also a bit unexpected, raising concerns that telaprevir, despite its high efficacy, might have safety issues. Specifically, some anecdotal reports of severe skin rash in patients taking telaprevir raised alarm bells on Wall Street, although Vertex has vehemently denied that any such problems exist.

Vertex believes that the data generated by PROVE 1, PROVE 2 and an upcoming PROVE 3 trial, if positive, will be enough to form the basis of an approval filing with the Food and Drug Administration in late 2008. The company does plan on running a phase III trial, starting in the second half of 2007, to add to the drug's safety database and support its FDA application.

If Vertex can hold to this aggressive time line, telaprevir could be on the market by early 2009.

Additional clinical trials of telaprevir are also under way, including studies in hepatitis C patients who have failed or responded poorly to current treatment.

Few doubt that telaprevir is a real drug or that it will increase cure rates for hepatitis C patients -- but by how much? And will the drug's benefits outweigh its risks? The answers to these questions are still unknown but will come fairly soon from data generated in the PROVE 1 and PROVE 2 studies.

Only after that data are released will investors be able to answer the risk/reward question for considering Vertex shares.