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These Mutated Cystic Fibrosis Cells Are Worth Billions to Vertex Pharma

CAMBRIDGE, Mass. ( TheStreet) -- This is my favorite data slide from Vertex Pharmaceuticals' (VRTX - Get Report) presentation at the European Cystic Fibrosis Society meeting. The slide is important because it helps explain how Vertex will dominate cystic fibrosis therapy and one day generate $10 billion in annual sales. [See the <a href="">&quot;roadmap&quot; I wrote about Tuesday.</a>]

You don't need to be an expert in cystic fibrosis to understand this slide and why it's bullish for Vertex. Let's go through it.

The data on the left (with the orange bars) represents "heterozygous" cells with two different cystic fibrosis mutations -- F508del and G542X. Think of these cells as a proxy for about 20,000 "heterozygous" cystic fibrosis patients worldwide who are among the most difficult to treat.

Treatment with single Vertex drugs -- Kalydeco (ivacaftor) or VX-809 ( lumacaftor) -- has minimal activity in these heterozygous cells. Doublet therapy -- using Kalydeco and VX-809 together -- enhances activity a bit. But check out what happens when you add a third "corrector" drug into the mix: The orange bar gets really tall. A tall bar in this graph is good because it means cells are functioning properly. In cystic fibrosis patients, functioning cells translates into vastly improved lung function.

The take-home point here: Vertex is demonstrating that triple-drug combinations can significantly improve the activity of cells with the hardest-to-treat cystic fibrosis mutations. This is an experiment in cells not humans, so Vertex still has to run clinical trials in real heterozygous patients, but the data on the left side of slide are an encouraging proof of concept.

The data on the right hand side of the slide (the green bars) are pretty cool, too. These are "homozygous" cystic fibrosis cells, representing about 30,000 patients worldwide. Vertex is already running phase III studies in homozygous patients using a doublet combination of Kalydeco and VX-809. This doublet therapy is represented by the second green bar from the right -- pretty decent activity.

But again, check out what happens when a third corrector drug is adding to the therapy. The green "activity" bar shoots skyward -- more proof that combinations of multiple Vertex drugs are likely to demonstrate a significant benefit for cystic fibrosis patients.

The biggest negative from this slide is time. It's going to take a few years for Vertex to test triple-drug combinations, get them approved and reach the market. Nothing represented on this slide is going to happen overnight, which might disappoint short-term oriented traders.

Why should investors care about this slide today? Because it represents about 50,000 cystic fibrosis patients worldwide and billions of dollars in annual sales not baked into Vertex's current $18 billion market valuation.

Those tall green and orange bars say Vertex's stock price is going higher.

-- Reported by Adam Feuerstein in Boston.

Follow Adam Feuerstein on Twitter.
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.

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