This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Vertex's Roadmap to $10 Billion in Cystic Fibrosis Drug Sales

CAMBRIDGE, Mass. ( TheStreet) -- Think of the chart above as a simple roadmap explaining how Vertex Pharmaceuticals (VRTX - Get Report) will one day come to dominate cystic fibrosis therapy and generate annual sales of $10 billion with little to no competition.

That's Vertex's plan, at least.

I say "one day" because the only box checked off on the Vertex cystic fibrosis roadmap to date is the small orange one representing about 2,000 patients with the relatively rare G551D mutation who benefit from Kalydeco monotherapy. Kalydeco sales are expected to reach $300 million to $340 million this year.

Here's how Vertex grabs the rest of the cystic fibrosis treatment market:

Step 1: Get Kalydeco monotherapy treatment approved for use in the approximate 5,000 patients with the R117H and non-G551D gating mutations. Phase III studies are fully enrolled with data expected in the second half of the year. The FDA granted Kalydeco Breakthrough Therapy Designation for these indications, which should help accelerate approval (as long as the results of the study are positive.)

Step 2: Use combination therapy -- Kalydeco plus the experimental "corrector" VX-809 -- to treat 30,000 cystic fibrosis patients with the F508del homozygous mutation. Two phase III studies of Kalydeco+VX-809 are underway with data expected in 2014. The FDA has also granted Breakthrough Therapy Designation to this combination therapy.

On Thursday, Vertex will present updated results from a phase II study of Kalydeco and VX-809 in F508del homozygous patients at the European Cystic Fibrosis Society (ECFS) conference. We've seen much of these data already but the update could -- should -- give investors greater confidence in a positive outcome for the ongoing phase III trials. Investors will be focused particularly on results from "cohort 3" which used a higher, 400 mg twice daily dose of VX-809, which Vertex decided to incorporate into the phase III trials.

Step 3: Figure out a way to treat 20,000 cystic fibrosis patients with F508del heterozygous mutation. This is the last and most challenging task facing Vertex because these "heterozygous" patients are the most difficult to treat. Vertex believes it can get there with combinations of Kalydeco plus second-generation correctors like VX-661 and VX-983.

Toward this end, the most interesting Vertex data presentation at the ECFS meeting on Thursday will be pre-clinical data demonstrating the activity of triple-combination therapy against heterozygous disease. Again, these are still laboratory experiments and triple combination therapy has not yet been studied in actual cystic fibrosis patients, but the data should serve as a proof of concept and give investors an idea of how Vertex might capture the last, large group of cystic fibrosis patients.

Follow the roadmap, don't get lost, and Vertex dominates cystic fibrosis just like Gilead Sciences (GILD - Get Report) does with HIV. Peak sales of $10 billion from Vertex's cystic fibrosis franchise is entirely realistic, which would make the stock's current $18 billion market valuation plenty cheap.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GILD $87.15 -2.10%
VRTX $82.13 -1.00%
AAPL $95.18 1.60%
FB $117.44 -0.95%
GOOG $692.33 -0.84%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs