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Vertex Pharmaceuticals (VRTX) |
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WIKI ANALYSIS
Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) is the 23rd largest biotechnology company in the world by revenue[1] and a forefront developer for Telaprevir and Lexiva/Telzier, which are treatments for HCV and HIV. Vertex's currently financial future is largely based on the financial outcome of Telaprevir, a new drug for HCV that was commercialized in 2008. Based in the United States, VRTX has networks in the United Kingdom, Japan, and Belgium. VRTX derives revenues from royalties and net sales from collaborative agreements with GlaxoSmithKline, Johnson & Johnson (JNJ), Janssen, Merck and Avalon Pharmaceuticals (AVRX).[2]VRTX uses these collaborations to balance risk and retains the potential for significant return in the form of downstream royalties, income-sharing, and co-promotion rights.[3] VRTX accelerates its business strategy by focusing on in-licensing deals and acquisition opportunities.
Company Overview
VRTX is a biotechnology company that researches, develops, and commercializes medicine for virual diseases, inflammation, autoimmune diseases, cancer, pain, and cystic fibrosis. Its current projects are focused on developing a treatment for HCV and HIV. HCV is a blood-borne infectious disease that is caused by hepatitis C virus, infecting the liver. HIV is a virus that causes the human immune system to fail and leads to life-threatening infections.
Telaprevir, the Company’s lead drug candidate, is an oral hepatitis C protease inhibitor and a new class of antiviral treatments in clinical development that target hepatitis C virus (HCV), infection.[4] Telaprevir is being evaluated in a registration program focused on treatment-naïve and treatment-failure patients with genotype 1 HCV infection.[4] It is also engaged in a number of other clinical development programs. VX-770, the lead drug candidate in its cystic fibrosis (CF) program, is being evaluated in a registration program that focuses on patients with CF who have the G551D mutation in the gene responsible for CF.[4] It is conducting a number of Phase IIa clinical trials of its earlier-stage drug candidates. These clinical trials consist of a planned clinical trial that will evaluate Telaprevir in combination with the HCV polymerase inhibitor VX-222, a planned clinical trial of VX-809 in combination with VX-770 in patients with the most common mutation in the gene responsible for CF, a clinical trial of VX-509 in patients with moderate-to-severe rheumatoid arthritis and a clinical trial of VX-765 in patients with treatment-resistant epilepsy.[4]
Business and Financial Metrics
Second Quarter 2010 Results (ended June 30, 2010)[5]
Vertex Pharmaceuticals reported a net loss of $200.0 million, or $1.00 per share, including certain charges totaling $57.5 million, compared to a GAAP net loss for the quarter ended June 30, 2009 of $171.3 million, or $0.99 per share, including certain charges totaling $42.0 million.
The non-GAAP loss, before certain charges, for the quarter was $142.5 million, or $0.71 per share, compared to $129.3 million, or $0.75 per share, for the year-ago period. The increase in the Company's 2010 non-GAAP loss was principally attributable to an increase in total operating expenses as the company prepares for the potential launch of Telaprevir and conducts a Phase 3 registration program for VX-770.
Total revenues for the quarter were $31.6 million, compared to $19.1 million for the second quarter of 2009. The increase is primarily attributable to higher collaborative revenues.
Research and development expenses for the quarter were $155.1 million, compared to $139.3 million for the second quarter of 2009. The increase primarily reflects greater commercial supply investment for Telaprevir.
Products
Telaprevir (VX-950)[4]
Telaprevir is designed to inhibit the NS3-4A serine protease, an enzyme necessary for HCV replication. The United States Food and Drug Administration (FDA), has granted Fast Track designation to telaprevir. Vertex has completed dosing of all study drugs in the registration program for telaprevir. It has collaboration agreements relating to telaprevir with Janssen Pharmaceutica, N.V., (Janssen), a Johnson & Johnson company, and Mitsubishi Tanabe Pharma Corporation, (Mitsubishi Tanabe). Its clinical development activities related to telaprevir are focused on genotype 1 HCV infection, which is a prevalent form of HCV infection in the United States, the European Union and Japan.
The three clinical trials in its registration program are ADVANCE and ILLUMINATE, Phase III clinical trials of telaprevir-based treatment regimens in treatment-naïve patients with genotype 1 HCV infection, and REALIZE, a Phase III clinical trial of telaprevir-based treatment regimens in treatment-failure patients with genotype 1 HCV infection. The ADVANCE trial is a 3-arm double-blinded placebo-controlled clinical trial that enrolled approximately 1,050 patients with genotype 1 HCV infection. ADVANCE contains two telaprevir-based treatment arms, one in which patients receive 12 weeks of telaprevir-based triple combination therapy and one in which patients receive eight weeks of telaprevir-based triple combination therapy, in each case taking peg-IFN and RBV for a period of time after completing telaprevir dosing.
ILLUMINATE is a Phase III clinical trial, which includes evaluation of 24-week and 48-week total treatment durations in treatment-naïve patients infected with genotype 1 HCV who achieve an eRVR in response to telaprevir-based treatment regimens. This clinical trial is a randomized, open-label trial that enrolled approximately 500 patients. The REALIZE trial is a 3-arm clinical trial of telaprevir-based treatment regimens in approximately 650 patients with genotype 1 HCV infection who failed to achieve an sustained viral response (SVR) after treatment with pegylated-interferon (peg-IFN) and RBV alone. One treatment arm is evaluating a lead-in strategy in which patients receive four weeks of pre-treatment with peg-IFN and ribavirin (RBV) prior to starting telaprevir. REALIZE is being managed by its collaborator Tibotec Pharmaceuticals Ltd., which is a Johnson & Johnson company and an affiliate of Janssen.
VX-222[4]
HCV polymerase inhibitors, including its HCV polymerase inhibitor VX-222, are direct-acting antiviral agents that inhibit the replication of HCV, but through a mechanism distinct from HCV protease inhibitors, such as telaprevir. VX-222 was evaluated by ViroChem, in Phase I clinical trials prior to its acquisition of ViroChem in March 2009. It is engaged in late-stage discussions with the FDA and other international regulatory authorities, regarding the initiation of a Phase IIa combination trial of telaprevir and VX-222.
Additional HCV Research Activities and Development Programs[4]
Vertex is conducting a number of earlier-stage research and development activities. It considers VX-759, a second polymerase inhibitor that it acquired in its ViroChem acquisition, to be a back-up drug candidate to VX-222. VX-759 has been evaluated in Phase 1 clinical trials, and there are no ongoing clinical trials for VX-759. VX-985, an investigational HCV protease inhibitor is in Phase I clinical development. VX-813, another investigational HCV protease inhibitor, is no longer in development. It has an ongoing research program directed at identifying NS5A inhibitors, a third class of specifically targeted anti-viral compounds.
Cystic Fibrosis[4]
The Company is conducting clinical trials of two drug candidates, VX-770 and VX-809. It discovered VX-770 and VX-809 in its research collaboration with The Cystic Fibrosis Foundation Therapeutics Incorporated (CFFT), and with the support and participation of the Cystic Fibrosis Foundation. It holds worldwide development and commercialization rights to VX-770 and VX-809.
VX-770[4]
VX-770 is an investigational oral drug candidate. In May 2009, it initiated a registration program, referred to as ENDEAVOR, for VX-770. The VX-770 registration program focuses on patients with the G551D mutation. The registration program consists of three clinical trials. The primary clinical trial, which is referred to as STRIVE, is a Phase III clinical trial of VX-770 that enrolled approximately 170 patients 12 years and older with the G551D mutation on at least one of the patient's two CFTR genes, or alleles. The second clinical trial, which is referred to as ENVISION, is a Phase III clinical trial of VX-770 in patients between 6 to 11 years of age with the G551D mutation on at least one allele. The third clinical trial, which is referred to as DISCOVER, is a Phase II exploratory clinical trial of VX-770 that enrolled approximately 120 patients with CF who are 12 years and older and with the F508del mutation on both alleles.
VX-809[4]
The Company completed a Phase IIa, 28-day clinical trial of VX-809 as a single agent in 89 patients 18 years or older with the F508del mutation on both alleles. This Phase IIa clinical trial was a randomized, double-blind, placebo-controlled, multiple dose clinical trial. Patients received one of four doses of VX-809, or placebo, in addition to standard therapies for 28 days. The trial was designed primarily to evaluate the safety and tolerability of VX-809. Multiple secondary endpoints were utilized to determine any effect of VX-809 on CFTR protein function and lung function.
VX-509[4]
VX-509 is designed to inhibit Janus kinase 3 (JAK3), which is involved in signaling pathways that control the survival and proliferation of a type of white blood cells referred to as lymphocytes. In January 2010, it initiated a Phase IIa clinical trial of VX-509 in patients with moderate-to-severe rheumatoid arthritis (RA). This double-blind, randomized, placebo-controlled trial will evaluate the safety, tolerability and clinical activity of four doses of VX-509.
VX-765[4]
VX-765 is designed to inhibit the interleukin-1 converting enzyme, which is an enzyme that controls the generation of cytokines, IL-1b and IL-18. VX-765 has been shown to inhibit acute seizures in preclinical models. In addition, VX-765 has shown activity in preclinical models of chronic epilepsy that do not respond to approved anti-epileptic drugs.
Acquisitions
On March 12, 2009, Vertex acquired ViroChem Pharma Inc. (ViroChem).[4]
Trends and Forces
Risk Factors
VRTX is expecting to continue incurring operating losses due to significant investments in research and development of Telaprevir. Net losses can fluctuate [6] and can have an adverse effect on stockholders' equity, total assets, and working capital. VRTX will conduct fundraising through public offerings or private placements of its debt or equity securities. [7] Equity financings can result in dilution to the company's existing security holders[8] While VRTX's financials depend on the commercial success of Telaprevir, VRTX is developing nine other drugs that are all still in the early stages of development. Successful development and testing of these drugs are crucial to VRTX's financial future. Also, VRTX needs to obtain approval from the United States and foreign regulatory officials in order to commercialize its drug candidates.[9]
An advancement in HCV treatment is desperately needed
There has been no new HCV drug since the introduction of alpha-interferon and ribavirin, and since the combo cause serious side effects, patients and physicians are calling for a new and better treatment. The market's acceptance of VRTX's Telaprevir will depend on its ability to curtail the usual treatment time of 52 weeks in half and achieve sustained virologic response, as Telaprevir claims to do. [10]There is strong interest in the market for new HCV drugs, but any errors on safety with Telaprevir will hurt consumers' expectations and the company's assets.[11]
Competition is heating up
In 2008, Abbott Laboratories, Merck, and Pfizer have also began trails for HCV protease inhibitors. If these projects are conducted in line with VRTX's projects, then VRTX's revenue would decrease in the face of market competition.
Drop in HCV infections
During the last 20 years, the annual rate of new HCV infections has dropped 88% to 20,000. Thus, Telaprevir is facing a shrinking market and needs to encourage testing for a potentially temporarily dormant disease. As a result, VRTX may be facing a shrinking consumer demand for its HCV drug.
Competition
Abbott Laboratories, Merck, and Pfizer are in Phase I trials for its HCV protease inhibitor. This increases the competition for VRTX as rivaling companies are racing to launch a new drug for HCV.
Vertex's collaborators include Abbott Laboratories, Merck, Pfizer, and GlaxoSmithKline. [12]
Vertex is directly competing against companies such as Abbott Laboratories and Bristol-Myers Squibb. Vertex's market capitalization is relatively smaller but has partnership with top pharmaceutical companies.[13]
References
- ↑ List of biotechnology companies
- ↑ http://www.vpharm.com/home/Vertex-Profile.html
- ↑ http://www.vpharm.com/current-projects/strategic-alliances.html
- ↑ 4.00 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10 4.11 4.12 Reuters: VRTX Company Profile
- ↑ Vertex Investor Relations: "Vertex Pharmaceuticals Reports Second Quarter 2010 Financial Results and Highlights Recent Business and Clinical Progress" July 28, 2010
- ↑ Vertex 10K
- ↑ Vertex 10K
- ↑ Vertex 10K
- ↑ Vertex 10K
- ↑ Merriman Curhan Ford, October 30th, 2008
- ↑ MorningStar,2008
- ↑ Comparison:Vertex and its Collaborators
- ↑ Comparison: Vertex and its direct competitors
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