Vertex Falls on Revised CF Data for Kalydeco Combo
By Catherine Shaffer
Vertex Pharmaceuticals Inc.'s stock slid more than 10 percent Tuesday following a release of corrected clinical data for a Phase II trial of Kalydeco (ivacaftor) with VX-809, showing that only 35 percent of cystic fibrosis (CF) patients with the F508del mutation experienced an absolute improvement in lung function (FEV1) of 5 percent or more, rather than the 46 percent as reported previously. (See BioWorld Today, May 8, 2012.)
The error was attributed to misinterpretation of interim data from the study, and CEO Jeff Leiden said the Cambridge, Mass.-based company was taking steps to correct it and ensure it would not happen again.
"On Friday of last week, we became aware that the responder analysis we presented as absolute improvement was actually relative improvement," Leiden said in a press conference Tuesday morning, explaining that the outside vendor used by Vertex had performed an incorrect calculation.
During the call, Leiden used an example to illustrate the difference between absolute and relative improvement. "If you start with an FEV1 as 60 percent predicted and you got to 66 percent predicted, that's a 6 percent absolute increase in FEV1 and a 10 percent relative increase in FEV1."
On May 7, Vertex reported that 46 percent of patients with two copies of F508del, or 17 out of a group of 37, showed an improvement in FEV1 of 5 percentage points or more, and 30 percent, or 11 out of 37, improved by 10 percentage points or more with the combination of VX-809 and Kalydeco.
But it turned out that those numbers were a percent of a percent, a relative improvement. In terms of an actual absolute improvement, only 13 out of 37 patients (or 35 percent) achieved FEV1 of 5 percentage points or more, and seven out of 37 (19 percent) improved by 10 percentage points or more.
Vertex's admission of the analysis oops put 19.68 million shares of Vertex stock (NASDAQ:VRTX) in motion Tuesday, compared to an average daily volume of 4.65 million. The price fell $7.05, or 10.9 percent, to close at $57.80. That's a relative loss of 19.62 percent of its 55.4 percent gain May 8.
Vertex also for the first time reported a mean absolute change in FEV1 from baseline to day 56 compared to placebo, which was a figure conspicuously absent in the previous interim report. That number was 8.5 percent.
The mean absolute change in FEV1 from baseline to day 56 for pooled treatment and placebo groups was 4 percent for the treatment group and -4.6 percent for the placebo group.
The large drop in the value for the placebo group generated intense discussion in the Q & A session following the company statement during the conference call, leading to an explanation by Vertex executives that much of the difference between the treatment and placebo groups fell into the time period between day 28 and day 56, when all patients would have completed a cycle of antibiotics.
Cyclic antibiotic treatment is standard-of-care treatment for CF patients, who are prone to constant lung infections. A cycle of 28 days on and 28 days off helps to prevent the development of antibiotic resistance. Vertex structured its trial so that all patients were synchronous in their antibiotic cycles.
Vertex speculated that the synchronized antibiotic cycle also produces a more dramatic short-term drop in a two-month period than one would expect looking at historical cohorts, but the company maintained that the placebo group was balanced with the treatment group and the statistical analysis was sound.
"You guys have a lot of questions about placebo, but I do want to just come back to that and remind you that whether it's CF, or whether it's heart failure, or whether it's rheumatoid arthritis, it's extremely important in these randomized trials to have a placebo group for all the reasons that you're talking about, which is you can't use historical controls because they don't always correspond to the current treatment group," Leiden said.
Piper Jaffray analyst Ted Tenthoff called today's stock drama a "great buying opportunity."
"We view the newly reported mean FEV1 improvement of 4 percent in treated patients at eight weeks in line with raised expectations and remain confident in the approvability of Kalydeco plus VX-809 in homozygous F508del CF patients," Tenthoff wrote in a research note. "The combo could yield long-term, high-margin blockbuster sales for Vertex."
Wells Fargo analyst Brian Abrahams also deemed it a good time to buy Vertex. "Shares remain undervalued, in our opinion, and we believe today's selloff is overdone. We would use today's weakness as a buying opportunity."
Abrahams noted that the "unusually high" 4.6 FEV1 decline in the placebo group is inconsistent with historical cohorts, which showed declines of 0 to 3 percent for the same time period. Although the company's comments were reassuring, Abrahams noted, "Still, the aberrant placebo response does raise the question of whether the study enrolled a somewhat atypical population, and adds some risk to the replicability of the results both for the combo's relative efficacy vs. placebo and the absolute mean improvements for the drug arm in Phase III."
In closing remarks, Leiden said, "When we look at all of the data and the data that we have shown you today, we remain very confident both from the responder analysis data, from the data of treatment effect vs. placebo and from the data on treatment effect vs. baseline that based on the interim analysis, we have an active drug here and therefore we are now planning . . . to move into Phase III."
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