Latest Vertex Offering May Be Too Little, Too Late

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SAN DIEGO --

Vertex

(VRTX) - Get Report

finally has a stage, but it may be too little, too late.

The Cambridge, Mass. biotech's protease inhibitor for AIDS, recently dubbed

Agenerase

, is the subject of a late-breaking abstract here at the 38th annual

Interscience Conference on Antimicrobial Agents and Chemotherapy

, or ICAAC.

Maybe they should have called it "Degenerase," which more aptly sums up its prospects. The drug significantly trails the rest of the protease inhibitors, notably

Agouron's

(AGPH)

market-leading

Viracept

and

Merck's

(MRK) - Get Report

Crixivan

. Vertex has licensed Agenerase to

Glaxo Wellcome

(GLX)

, which took over development of the drug and has been blamed by Vertex as the major reason the drug has been so delayed. In addition, the company had formulation problems early on, according to analysts, and also had difficulty enrolling patients in its clinical trials.

The drug was supposed to have been on the market by now. At ICAAC last year, the word was a delay would push it back to late this year. Now, it looks like Agenerase won't be launched until mid-1999. Vertex officials could not be reached for comment immediately.

The data being presented here at ICAAC followed AIDS patients out for 16 weeks. The Phase III trial tested amprenavir, as the drug is known chemically, in triple combination with Glaxo's

AZT

and Glaxo's/

Biochem Pharma's

3TC

in 232 patients, comparing it with just 3TC and AZT alone.

The control group's treatment of just two drugs is outdated, however. The standard of care for well over a year has been composed of three drugs in combination -- either two reverse inhibitors and one protease inhibitor, or, more recently, three reverse-transcriptase inhibitors. As a result, analysts pronounced the Vertex/Glaxo data virtually meaningless. Other PIs have data out for two years in triple combination. This data will be presented on Sunday.

Craig Parker, a biotech analyst with

Donaldson Lufkin & Jenrette

, upon hearing the data said, "That's not clinically relevant." He said the trial doesn't help Glaxo position the drug in any way. The data say nothing about the durability of the response, the resistance profile, the convenience or the potency. He does not have a rating on Vertex. DLJ has not done any underwriting for the company.

In the trial, the drug was successful in bringing viral loads -- the measure of how much HIV is in the blood -- down below 50 copies per milliliter in 60% of patients, compared with 9% in patients only getting the latter two drugs. The percentage of patients who had viral load fall below 400 copies per milliliter was higher. In the treated population, 80% of the group treated with Agenerase had their viral loads fall below the 400 copies measure. On an "intent to treat" basis, a more pure statistical measure that takes into account all patients enrolled in the study, 79% of the drug group fell below 400.

These are more or less comparable results to the other protease inhibitors at 16 weeks, which ranged from 80% to over 90% in controlled clinical trial settings, but have actually been shown to work in about 50% of patients in a real-world setting. But since the drug dosing requires 16 pills per day, the data needed to be stronger, analysts said, for Vertex to differentiate itself.

The main side effects were nausea, rash and diarrhea. The side effects didn't require lowering of the dose, according to the abstract.

Vertex will get a royalty, estimated in the high teens, of Glaxo's sales on the drug.

Vertex closed Thursday at 24 3/4. The stock has had a big run-up in recent weeks, gaining 70.9% since its 52-week low on Aug. 31. But as one New York hedge-fund manager mused yesterday morning over which puts to buy, the October or the November (which were twice as expensive), the indication was that the stock was likely to come down after the meeting. The managers apparently opted for the October 22 1/2 puts, which traded 170 contracts against open interest of just four, for a slim premium of 15/16 (or $93.75 per contract). The price of the contract was essentially flat, however, showing that traders weren't flocking to short the company just yet.