Vertex Moving Closer to a Cure for Hepatitis C

On the heels of the FDA's approval of Vertex Pharmaceuticals (VRTX) hepatitis C drug Incivek this May, Vertex just announced encouraging Phase II data on a new combination therapy including Incivek and an experimental drug VX-222.

When Incivek was evaluated in clinical trials for its FDA approval application, the current standard of care for patients with chronic hepatitis C was peginterferon alfa and ribavirin taken for 48 weeks, from which less than 50% of patients responded to the therapy.

According to the FDA news release, "in previously untreated patients, 79 percent of those receiving Incivek experienced a sustained virologic response (i.e., the infection was no longer detected in the blood 24 weeks after stopping treatment) compared to standard treatment alone."

Just this week, Vertex released very encouraging Phase II data on a four-drug combination therapy including Incivek and an experimental oral drug VX-222, along with the standard treatment of peginterferon alfa and ribavirin, although the study was small with only 30 patients.

Of the 30 patients in the study that received the four-drug therapy, 50% were able to stop treatment after 12 weeks (with 93% having a "sustained viral response," or no detectable hepatitis C virus 12 weeks after treatment). The remaining patients were given the two-drug standard treatment for 12 additional weeks, and 100% of them had a sustained viral response, appearing to be cured as well.

According to Bloomberg, some analysts are hesitant to call this a clear victory. "The patient numbers are relatively small in this study, and the results incomplete, but they are more encouraging than we would have expected," Sanford Bernstein analyst Geoffrey Porges said in a research note.

"It is still too early to declare that VX-222 is a viable drug deserving of significant value in Vertex's stock price today. The tolerability and safety will need to be established in much larger trials."

The market for hepatitis C drugs is large, with analysts forecasting Incivek to become a multibillion-dollar seller, according to Bloomberg.

Several large pharmaceutical companies are competing for this market. Also this May, the FDA approved Merck's (MRK) hepatitis C drug Victrelis, which had seen two-thirds of treated patients with sustained virologic responses in two clinical trials.

According to a report from Fierce Biotech, Bristol-Myers Squibb and Pharmasset are developing an interferon-free hepatitis C drug that is currently in Phase II as well.

How do you think the treatment of hepatitis C will evolve? If you are interested in learning more about these companies and their stocks, we include below some pertinent data for the companies listed in this article.

(Click here to access free, interactive tools to analyze these ideas.)

1. Vertex Pharmaceuticals Incorporated (NAS: VRTX) : Drug Manufacturers Industry. Market cap of $10.21B. The stock has gained 46.25% over the last year.

2. Merck & Co. (NYS: MRK) : Drug Manufacturers Industry. Market cap of $110.47B. Offers a good dividend, and appears to have good liquidity to back it up -- dividend yield at 4.25%, current ratio at 1.98, and quick ratio at 1.59. The stock has gained 6.26% over the last year.

3. Bristol-Myers Squibb Company (NYS: BMY) : Drug Manufacturers Industry. Market cap of $49.54B. Offers a good dividend, and appears to have good liquidity to back it up -- dividend yield at 4.55%, current ratio at 1.97, and quick ratio at 1.77. The stock has gained 20.35% over the last year.

4. Pharmasset (NAS: VRUS) : Drug Manufacturers Industry. Market cap of $4.79B. The stock has had a good month, gaining 20.44%.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.

Kapitall's Alexander Crawford does not own any of the shares mentioned above. Data sourced from Finviz.

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