Vertex Drug Could Be Huge

McMinn is one of the best hepatitis C analysts on Wall Street. She recently moved from Piper Jaffray to Cowen, where she picked up coverage of Vertex with an outperform rating. (She also made a great call on ViroPharma(VPHM) last week, downgrading the stock the day before the company's hepatitis C drug HCV-796 blew up over toxicity issues.)

I asked Alam and Smith if they were comfortable with the analyst's prediction for telaprevir's cure rate, which, by the way, is in line with other Wall Street analysts. While not wanting to endorse a specific number, both said they felt that an SVR rate in the 50%-to-60% range was entirely possible from the current phase II studies -- and that even higher SVR rates were achievable in phase III.

Remember: The SVR data from the ongoing phase II studies will be presented Nov. 2 through Nov. 6 at the annual meeting of the American Association for the Study of Liver Disease.

Something else helping Vertex these days is that some of the competitors developing new hepatitis C drugs are stumbling. InterMune(ITMN) is developing a drug similar to telaprevir, but its clinical program has been slow out of the blocks, with delays to the start of human clinical trials.

ViroPharma's drug looks dead because of problems with liver toxicity, while both Coley Pharmaceuticals(COLY) and Anadys Pharmaceuticals(ANDS) have been forced to shelve their respective drugs because of safety issues.

But don't think Vertex won't have competition. In fact, there are other hepatitis C drugs still moving well through clinical trials, but right now, telaprevir has a fairly commanding lead. If sustained, that could complicate efforts by other companies to get their hepatitis C drugs approved.

>To order reprints of this article, click here: Reprints