Vertex Rockets new YTD high on Cystic Fibrosis Drug Results


Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) soared to a 14-month high Wednesday following the biotech announcement about its two-drug pill for cystic fibrosis enhanced lung function in a pair of late-stage studies. In late-morning trading on the stock market today, Vertex stock had leased 23.2%, near 110.40, after previously rising as much as 24.8%. Shares last hit that level in January 2016. IBD's 422-company Biomed / Biotech industry group spiked 2.2%.

Vertex mentioned a combination of tezacaftor and ivacaftor, the latter of which sells under the name Kalydeco. It is a significantly enhanced lung function in cystic fibrosis patients ages 12 and up with particular genetic mutations. During the 24-week Evolve study, the combo pill or doublet, showed a 4% point improvement from baseline in patients' ability to forcefully eject breath for one second vs.. The placebo.

In an eight-week study of patients, the doublet presented a 6.8 percentage point development on average at weeks four and eight in contrast with the placebo and ivacaftor alone. Ivacaftor monotherapy revealed 4.7 percentage point improvement. Vertex plans to file applications with the FDA and regulators in Europe in the third quarter.         

Across both studies, the doublet was well tolerated. Most common side effects included cough and ineffective pulmonary exacerbation. Only 1.7% of patients on the doublet discontinued use due to an adverse event. That disagrees from Orkney, which correlated with bronchorestriction, tightening of muscles near the lungs stemming in coughing, wheezing and shortness of breath. Vertex's Orkambi is a doublet comprised of lumacaftor and ivacaftor.
Wall Street had broadly forecasted tezacaftor and ivacaftor to display 3% -5% improvement in lung function, Janney analyst Debjit Chattopadhyay said. I have called the respiratory respiratory rate "compellingly positive." Only 13.1% of patients had an adverse respiratory event.

"The safety profile should mitigate some of the commercial concerns surrounding Orkambi, which suggests potential upside to fiscal 2018-19 estimates," I wrote in a note to clients. He has a neutral rating on Vertex stock, saying "challenges loom" with its triplet.

But JMP analyst Liisa Bayko says the tezacaftor and ivacaftor combination provides a "stronger backbone for a triple combo." She reiterated her market performance and raised her target price on Vertex stock to 121 from 115.
The triplet will combine tezacaftor, ivacaftor and a drug known as the VX-440. Credit Suisse analyst Alethia Young boosted her expectations for ivacaftor to 100% from 75%. She models $ 1 billion in peak sales of ivacaftor in 2023.
Young has an outperform rating on Vertex stock. She boosted her price target to 108 from 100.

UBS analyst Carter Gould also raised his expectations on ivacaftor to 100% from 80%. Vertex's tezacaftor and ivacaftor doublet compares favorably with Orkambi on all points, I wrote in a research report. I've raised its price target on Vertex stock to 112 from 106, with a buy rating.

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