Staff Writer

Vertex Pharmaceuticals Inc., on a fundraising streak after raising $945.8 million since last February, now aims to raise $442.8 million in a stock sale.

The Cambridge, Mass.-based company has agreed to sell 11.5 million shares of stock in an underwritten offering at a price of $38.50 per share, a discount of 2.5 percent. Vertex could bring in additional funds if the underwriters exercise an option to purchase up to an additional 1.5 million shares on the same terms and conditions.

The company said in a regulatory filing that it plans to use the money from the offering for development and commercialization of telaprevir for hepatitis C virus and cystic fibrosis drug candidate VX-770. Goldman, Sachs & Co. is acting as the sole book-running manager for the offering, with BofA Merrill Lynch, J.P. Morgan Securities Inc. and Morgan Stanley & Co. Inc. acting as co-managers.

The company has raised nearly a billion dollars over the past year, raking in $405.8 million in an offering of notes and stock in February 2008, $220 million through a stock sale in September 2008, and $320 million earlier this year.

That money doesn't count the company's monetized milestones.

Vertex received a total of $155 million in cash from the issuance of notes repayable no later than Oct. 31, 2012, and the sale of up to $95 million of rights to potential future milestone payments that the firm is eligible to receive from Janssen Pharmaceutical for the launch of telaprevir in Europe.

The company also restructured its agreement with Mitsubishi Tanabe Pharma Corp. related to Japanese approval of the HCV drug, which brought in $105 million.

At the end of September, Vertex had $856.6 million in cash, cash equivalents and marketable securities. When the company gave its year-end cash guidance of about $800 million, it did not include the latest offering, spokesman Zachry Barber told BioWorld Today.

Thomas Russo, an analyst with Robert W. Baird & Co., wrote in a research note that based on the $856.6 million at the end of September, and current burn of about $535 million a year, the cash runway is now about 2.5 years. "This should allow [Vertex] to maintain about 1+ years of cash through about the second quarter of 2011 commercial launch of telaprevir."

Unless there are major delays, Vertex "should be in good shape in terms of getting to commercial launch of telaprevir," Leerink Swann analyst Howard Liang told BioWorld Today.

Vertex has tried to avoid raising money this year, Liang said, noting that it sought to monetize milestones related to the European approval of telaprevir. But he said dilution remains a concern because of the company's high burn rate.

If telaprevir reaches the market, Liang said, it could be "a pretty major improvement" over the standard treatment, a combination of peginterferon and ribavirin. Peginterferon is sold as PegIntron by Schering-Plough Corp., now part of Merck & Co., and Pegasys by Roche AG.

Liang said he would expect a "robust launch" given that many patients with hepatitis C virus have failed prior treatment. Telepravir is the first drug that has shown efficacy in that population, he said. While standard drugs require a full year of treatment and a 40-50 percent cure rate, telepravir could reduce treatment to six months and may have a higher cure rate in the 70 percent range, Liang said.

At this year's American Association for the Study of Liver Diseases meeting in Boston, data from the Phase II C208 study showed a greater than 80 percent SVR rate in all four treatment regimens of telaprevir plus ribavirin and interferon, including two arms that tested twice-daily dosing. (See BioWorld Today, Nov. 3, 2009).

Boceprevir, a protease inhibitor from Kenilworth, N.J.-based Schering-Plough (acquired by Merck) is in Phase III studies in treatment-naïve patients and in patients who have failed prior treatment. Studies are fully enrolled and Schering-Plough expects completion in mid-2010.

There also are a handful of Phase II compounds in development to treat hepatitis C virus that could provide better dosing, Liang said. The Phase II compounds are being studied by Boehringer-Ingelheim, Medavir and Johnson & Johnson, Merck and Roche.

Shares in Vertex (NASDAQ:VRTX) were up 73 cents, closing at $40.22.