A wild ride in Hepatitis C treatment: Vertex stock gives investors whiplash
March 14th, 2011 5:56 pm ET
Boston Health News Examiner
Has anyone noticed that Vertex Pharmaceuticals, Cambridge MA (VRTX, Nasdaq) stock has been bouncing around like a ping pong ball during the last months? Traders have been consistently excited about the positive news from Vertex’s Hepatitis C virus (HCV) treatment telaprevir. And some news about a treatment for cystic fibrosis pushed the stock to it’s 52 week high on March 4. But investors reacted (or should we say over-reacted) quite strikingly to some extremely early, positive (but as yet unpublished) results from a very short and small study testing efficacy of Pharmaset’s Hepatitis C treatment, and Vertex’s stock lost 12% of it’s value abruptly last week. Now Vertex stock is undergoing a small uptick based on positive results from it’s anti-inflammatory to treat epilepsy. What a roller coaster ride! It is really very unlikely that any of these results justify such large changes in the value of the company’s stock.
Let’s go back to telaprevir, the treatment for Hepatitis C that is the foundation of Vertex’s value at this point. Hepatitis C virus is a leading cause of chronic liver disease in the United States, and it is estimated that 170 million people worldwide have clinical signs from Hepatitis C virus infection. HCV can cause acute liver disease with severe symptoms, but about 75% of patients develop chronic HCV which can vary from asymptomatic to chronic liver failure and cirrhosis over a course of 10-20 years. HCV is a enveloped, single stranded RNA virus which infects liver cells, proliferates in the cell and then goes on to infect many more cells with each replication process. The end result is destruction of the liver. The viral replication process requires the virus to make an enzyme called NS3/4A. When telaprevir is in the circulation, it binds to the NS3/4A enzyme and prevents the virus from proliferating in the liver cell.
Present standard of care for Hepatitis C infection is a combination therapy of pegylated interferon alpha plus ribavirin for 24-48 weeks. Approximately 70-80% of patients infected with Hepatitis Virus type 2 and type 3 respond to this treatment, whereas Hepatitis Virus type 1 is only successfully treated in 40% of patients. Success is measured as ‘sustained virological response’ or SVR, where the virus is undetectable 24 weeks after therapy has ended. The treatment plan for telaprevir is to add it to the combination of interferon and ribavirin, and the desired result is an improvement in the per cent of patients with SVR in Hepatitis Virus type 1 patients previously untreated. In addition, Vertex investigated whether treatment of patients who did not respond to interferon and ribavirin, or who responded and then relapsed would achieve SVR by repeat treatment with the addition of telaprevir.
Vertex filed a NDA in November 2010, and was granted a 6 month priority review by the FDA, which reduced the time for the FDA to evaluate the submission from 10 months to 6 months. The data in the NDA was based on three studies. Two recruited people never before treated for Hepatitis C and treated them with a combination of pegylated interferon, ribavirin and telaprevir. 75% achieved a viral cure (SVR) with telaprevir-based combination therapy, compared to 44% of people who received pegylated-interferon and ribavirin alone; The data showed there was no benefit to extending total treatment from 24 weeks to 48 weeks in people who responded quickly, so treatment time was cut in half for many patients. The third study was done in people with hepatitis C who had not achieved a viral cure with a prior course of treatment. 83% of prior relapsers and 29% of prior non-responders achieved a viral cure with telaprevir-based combination therapy compared to 24%, and 5% of people in these subgroups, respectively, who received pegylated-interferon and ribavirin alone. This result, in particular, is quite exciting, as prior to the availability of telaprevir, non-responders or relapsers had only a tiny hope of improved response with a second course of ribavirin/pegylated interferon therapy. In March, Vertex reported that telaprevir helped eliminate the hepatitis C virus in 70 percent of patients who were also infected with HIV, according to interim analysis from a small midstage clinical trial. The interim analysis looked for a rapid viral response (RVR), meaning the hepatitis C virus was undetectable in the blood after four weeks of treatment.
Vertex has stiff competition from Merck, who also filed an NDA for boceprevir for treatment of Hepatitis C in studies designed similarly to those for telaprevir. Boceprevir has the same mechanism of action against the Hepatitic C virus as telaprevir. Efficacy was similar for boceprevir and telaprevir, but Merck is grappling with anemia as a side effect of boceprevir, and the anemia is severe enough to require treatment with recombinant erythropoietin. Although more than 20 other drugs are in development for Hepatitis C, the advanced state of telaprevir and boceprevir, and the good results with both will require that any new drugs differentiate themselves by complete elimination of the virus, or an advance that would not require combination with pegylated interferon and ribavirin, both of which cause clinically important side effects.
Back to Vertex and it’s wild stock ride. In May 2009, Vertex stock was trading at $29, and it slowly rose to $37 in May 2010 after phase 2 results for telaprevir were reported. The stock hit $47 after the filing of the NDA and then the release of the recent study in patients co-infected with Hepatitis C and HIV. In February Vertex released some results for VX-770, a genetic treatment for 4% of cystic fibrosis patients (1) with a genetic mutation known as G551D. Patients with the G551D mutation have sufficient cystic fibrosis transporter proteins on the surface of cells but the proteins are damaged and don't work correctly. VX-770 is a "potentiator" designed to improve the function of the damaged CFTR proteins, thereby fixing the root cause of cystic fibrosis in these patients. Although this drug will be targeted to a very small subpopulation of cystic fibrosis patients, those with the gene mutation G551D sustained a 10.6% improvement in lung function. Vertex had designated a 4.5% improvement as a positive endpoint for this study, so these results are solidly positive. Based on this result, Vertex’s stock rose to a 52 week high of 51.07 on March 4.
Just last week, at the International Liver Congress in Berlin, Pharmaset, a Princeton, NJ biotech company presented a poster which claimed that combination therapy with 2 nucleotide analogs resulted in 95-100% of patients with no detectable Hepatitis C virus 4 weeks after initiation of treatment. While quite promising, this type of viral therapy has been around since the development of AZT which was approved by the FDA for treatment of HIV in 1987. While Pharmaset’s dual therapies demonstrated increased efficacy compared to treatment with either drug alone, the study reported results in only 30 patients. Nucleotide analogs are well understood, and typically induce viral resistance with sustained use. The use of 2 different analogs together may circumvent this problem, but much longer studies are needed to be able to predict the success of the Pharmaset drugs for treatment of Hepatitis C. But this study does generate excitement centered around the fulfilling of the 2 remaining goals for Hepatitis C virus treatment: Complete elimination of the virus, and removal of requirement for treatment with interferon and ribavirin. But based on this very early, very short study in 30 patients, Vertex’s stock plummeted 12% to $44.80 on March 10. It is way too premature to predict what effect the Pharmaset drugs will have on the market for telaprevir.
Luckily, on that same day, Vertex fought back by releasing positive safety and tolerability goals in a midstage study of an anti-inflammatory for treatment-resistant epilepsy, a type of epilepsy where seizures start and occur in a specific part of the brain. The study enrolled and dosed people who had not benefitted from the use of at least two currently available medicines. While the drug was safe, efficacy was not significant. But, greater improvements were observed in the last two weeks of the treatment phase and first two weeks of the follow-up period, which suggests that a longer-duration study may be needed to evaluate the effectiveness of the drug. Vertex expects to begin this study as early as the fourth quarter.