Managing Editor

Even as analysts are looking for Vertex Pharmaceuticals Inc. to report a third-quarter profit next week on better-than-expected sales of hepatitis C drug Incivek (telaprevir), the Cambridge, Mass.-based biotech is gearing up to launch a second drug.

Vertex filed a new drug application, seeking priority review, for Kalydeco (ivacaftor, formerly VX-770) in cystic fibrosis (CF) patients who have the G551D mutation in the cystic fibrosis transmembrane conductance regulatory (CFTR). Should the FDA grant approval in the first half of next year, Vertex would be a singular story in today's biotech sector – a midsized biotech that, in less than a year's time, got two products through to the market in the U.S.

In an economic environment that has led many industry experts to wonder if the FIPCO (fully integrated pharmaceutical company) model is dead, most biotechs find themselves seeking partners for all but the most rare of orphan programs. It's unusual for a firm to push one product through to the market on its own – much less two – but that's what Vertex has done, thanks to some creative dealmaking and financing strategies.

In 2006, the company partnered Incivek in Europe with Johnson & Johnson subsidiary Janssen Pharmaceutica NV for $165 million up front. That deal also included $380 million in potential milestones, plus a tiered royalty averaging in the mid-20 percent range. Vertex later licensed Japanese rights to Osaka, Japan-based Mitsubishi Tanabe Pharma Corp. in a deal that was retooled in 2009 to trade future royalties for an immediate cash infusion of $105 million. (See BioWorld Today, July 31, 2009.)

Between 2008 and 2010, Vertex amassed more than $1 billion from a series of public offerings and picked up another $160 million by selling royalty rights for two protease inhibitors sold by GlaxoSmithKline plc to Cowen Healthcare Royalty Partners. It also sought to sell future European milestones in its telaprevir deal with Beerse, Belgium-based Janssen. (See BioWorld Today, July 13, 2009.)

All those activities left Vertex well positioned to launch Incivek shortly after the FDA approved the protease inhibitor in hepatitis C virus patients in May. Second-quarter sales of roughly $75 million bested predictions and left most analysts anticipating a third-quarter profit when Vertex execs announce earnings next week. (See BioWorld Today, May 24, 2011.)

If the approval and launch of CF drug Kalydeco goes as well, Vertex will end 2012 with two solid franchises and plenty of room to grow.

Assuming a six-month review of Kalydeco, the drug could see approval in April. Piper Jaffray analyst Edward Tenthoff forecasts sales of the drug reaching about $117 million in 2012 and about $301 million in 2013.

While Kalydeco is targeting only a small segment of the CF population – about 4 percent of CF patients in the U.S. are believed to have at least one copy of the G551D mutation – it would be the first drug aimed at the underlying defective protein that causes CF. Existing treatments such as Pulmozyme (dornase alfa, Roche AG) and Tobramycin (tobramycin inhalation solution, Novartis AG) focus on symptom management.

In patients with G551D mutations, CFTR proteins on the cell surface do not function properly. Kalydeco is designed to work as a potentiator, increasing the function of defective CFTR proteins by increasing their ability to transport ions across the cell membranes.

The drug performed well in pivotal testing, with data from the 161-patient STRIVE study showing that Kalydeco resulted in a mean improvement of forced expiratory volume in one second of 10.6 percent from baseline through week 24 and fully sustained improvement through week 48 vs. placebo. A separate study testing the drug in children ages 6 to 11 also yielded strong data. (See BioWorld Today, Feb. 24, 2011, and March 30, 2011.)

Wells Fargo analyst Brian Abrahams noted that Vertex has initiated an expanded early access program, which "could be important in facilitating speedy uptake of the drug upon approval," though he added in a research report that physician feedback already "suggests extremely high interest and awareness such that rapid initial uptake is likely anyway."

The firm is expected to file for approval of Kalydeco in Europe by the end of this month.

Analysts also are looking ahead to combination treatment involving Kalydeco and Vertex's earlier-stage CF drug VX-809. A Phase II study testing the two drugs together showed positive results in June, and the combo regimen's use in "a broader CF population could lead to blockbuster sales," Piper Jaffray's Tenthoff wrote in a research note.

Kalydeco was discovered as part of Vertex's collaboration with Cystic Fibrosis Foundation Therapeutics Inc., though the biotech retains full rights to the program.

Shares of Vertex (NASDAQ:VRTX) closed Wednesday at $40.17, down 77 cents.