Biotech Values

[DewDiligence]

VRTX closed +2% (yawn). The tepid reaction to yesterday’s news stems from investors’ expectations having been well calibrated. VRTX ran a very large phase-2 program for Telaprevir—perhaps the most comprehensive phase-2 program in the history of the pharma industry. Moreover, the mechanisms of action for antiviral drugs are much better understood than the MoA's for drugs in other classes; hence, if an antiviral drug works in phase-2, it almost always works well in phase-3. In effect, the purpose of phase-3 trials for antiviral drugs is to show safety rather than efficacy.

Other than the one case of Stevens-Johnson Syndrome, Telaprevir had a pretty clean safety profile in the data reported yesterday. With respect to the one case of SJS, it will be interesting to see whether analysts accept at face value VRTX's assertion that this SAE was not related to Telaprevir.