Updates with stock price.

CAMBRIDGE, Mass. ( TheStreet) -- Vertex Pharmaceuticals ( VRTX) released new late-stage clinical data Tuesday demonstrating that 65% of hepatitis C patients whose prior therapy was unsuccessful were able to later achieve a viral cure following treatment with the company's experimental drug telaprevir plus the current standard of care.

By comparison, only 17% of these hard-to-treat hepatitis C patients were cured after being treated again with the current standard of care -- long-acting interferon plus ribavirin. The results were statistically significant.

The news helped Vertex shares move almost 3% higher to $36 in Tuesday's after-hours trading session. In advance of the data, Vertex fell almost 3% to $35.01.

These results come from the last of three major phase III studies of telaprevir conducted by Vertex and partner Johnson & Johnson ( JNJ). Previous, positive results from the other two late-stage telaprevir studies in newly treated hepatitis C patients were released in May and August. The companies intend to seek regulatory approval for telaprevir later this year.

This last phase III study, dubbed "Realize," was set up to confirm previous, earlier findings that showed telaprevir could cure a significant number of hepatitis C patients without treatment options because they failed to respond to the current standard of care.

The Realize study enrolled 662 so-called treatment resistant hepatitis C patients split into three different groups: Those who respond to treatment but then relapse during the follow-up period; patients who partially respond to treatment but whose virus never completely disappears; and patients who never respond well to treatment at all.

Since these patients have a form of the hepatitis C virus that is more stubborn or harder to treat, Vertex extended the total treatment duration in the Realize study to 48 weeks, compared to just 24 weeks in the previous studies of newly treated patients. Like in other studies, telaprevir was still dosed for only 12 weeks.

The overall results showed that 65% of patients treated with telaprevir plus the standard of care achieved a cure, or sustained viral response, compared to 17% of patients in the control arm who were re-treated with just the standard of care.

Breaking the results down into the different groups, 86% of relapsers were cured after telaprevir treatment compared to 24% in the control arm.

Among partial responders, the cure rate for the telaprevir-treated patients was 57% compared to 15% for the control arm.

Finally, in the null responder patients, the most difficult to treat patients, telaprevir achieved a 31% cure rate compared to 5% for the control arm.

Results across all three patients types were statistically significant in favor of telaprevir over standard of care.

Wall Street has been waiting for the data from the Realize study, generally expecting overall cure rates for telaprevir in the 60-70% range. The data are important because the competitive race towards approval of the first new hepatitis C drug that acts directly against the virus is heating up.

Merck ( MRK) is developing its own hepatitis C drug boceprevir and is the closest competitor to Vertex. In August, Merck announced results from phase III studies showing that treatment with boceprevir led to a 66% cure rate in treatment-resistant patients.

Optically, it would appear that boceprevir and telaprevir are equally effective in curing treatment-resistant patients, which would be a letdown for Vertex and its investors given that expectations have clearly favored Vertex's drug over Merck's.

However, Vertex allowed truly non-, or null, responders into the Realize study of telaprevir, which made it more difficult for the drug to prove efficacy. Merck, on the other hand, used a less stringent definition of null response that essentially helped boceprevir achieve a higher cure rate.

If null responders are removed from analysis of the Realize study, the cure rate for partial responders and relapsers to telaprevir was 78%, which is a more accurate comparison to the 66% cure rate seen in the Merck study of boceprevir.

This doesn't mean that all went swimmingly for Vertex in the Realize results. The 31% cure rate in the null responders group treated with telaprevir was lower than what Wall Street was expecting given prior results from earlier studies.

Some analysts, including Bank of America's biotech analyst (and hepatitis C axe) Rachel McMinn, were expecting to see null responder cure rates for telaprevir in the 50% range.

Vertex said that the null responders enrolled in the Realize study had higher rates of cirrhosis and high hepatitis C viral load than the other patients in the study, which could help explain why the cure rate among these patients was lower. Despite that, telaprevir still cured six times more null responders than re-treatment with the standard of care.

Likewise, the 57% cure rate for telaprevir in partial responder patients was also a bit lower than Wall Street expectations, which means the overall, high response rate to Vertex's drug was driven largely by relapsers, considered to be the easiest of the treatment-resistant patients to respond to follow-on therapy.

On the safety side of the ledger, the new telaprevir data appear to be little changed from what's been released from the previous phase III studies. Adverse events leading to patients dropping out of the study were 4% in the telaprevir arm compared to 3% in the control arm. The most common adverse events attributed to telaprevir were fatigue and rash.

Vertex intends to make a full presentation of the Realize study data at a future medical meeting or by publication in a medical journal. Both Vertex and Merck will be among the companies presenting hepatitis C drug data at the American Association for the Study of Liver Disease annual meeting at the end of October.

--Written by Adam Feuerstein in Boston.

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