Biotech Values

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Feuerstein on Vertex (VRTX) and BMY's blow-up with nuc


Vertex is still very much in the Hep C game. The company's experimental drug ALS-2200 (at the highest dose tested) yielded a 4.54 log10 reduction in viral load after seven days of dosing in genoytype 1 hepatitis C patients. ALS-2200 wasn't studied directly against similar Hep C "nucs" in this pilot trial but, naturally, that isn't stopping investors from making their own comparisons. The potency of ALS-2200 stacks up quite well compared to Gilead Sciences' much beloved GS-7977 (4.5 log10 reduction after seven days) and Bristol-Myers Squibb's(BMY_) BMS-094 (4.25 log10 reduction after seven days).

Oh, wait, did I just mention BMS-094? Silly me.

The caveat to all this is that the ALS-2200 results, as promising as they are, only come from eight patients dosed for a week. The blowup of Bristol's nuc in phase II on Wednesday night will place greater scrutiny on the longer-term safety of Vertex's new drug. It's a wee bit early to declare ALS-2200 the next Hep C wonder drug. Gilead has already started phase III studies of '7977 so Vertex is probably 18 months to two years behind.

It is worth noting, however, that Vertex enters the coveted Hep C "nuc" club with ALS-2200 by spending far, far less than the $11 billion Gilead spent to buy Pharmasset in order to gain control of '7977. Investors don't seem to care about Gilead overpaying to get into Hep C today but they may care in the future if the treatment pie gets sliced into smaller and less valuable pieces due to a glut of all-oral regimens that all work equally well.

As for Incivek, ALS-2200 isn't a replacement drug. It may be complementary if combination studies planned are successful. The problem, however, is that Incivek is not an attractive drug moving forward due to side effects and dosing (two or three times a day). I'd rather see Vertex test ALS-2200 in combination with a more convenient and less toxic protease inhibitor like Johnson & Johnson's(JNJ_) TMC435 (co-owned with Medivir.) Vertex also needs to find an NS5a inhibitor that it can combine with ALS-2200. Perhaps Idenix's IDX719 might be a good choice?


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