What happened
Shares of Vertex Pharmaceuticals Incorporated (VRTX 1.29%) were trading 14% higher as of 11 a.m. EDT on Friday. The nice jump for the biotech stock came after Galapagos N.V. (GLPG 1.69%) announced disappointing results Thursday evening from a phase 2 clinical study evaluating C2 corrector GLPG2737 in treating cystic fibrosis (CF).
Galapagos' CF drug met its primary endpoint of a statistically significant change from baseline in sweat chloride concentration compared to a placebo at day 28. However, the drug didn't improve lung function by a statistically significant level.
Image source: Getty Images.
So what
Galapagos' disappointment could mean that Vertex will maintain a virtual monopoly in treating cystic fibrosis. Vertex currently has three approved drugs that improve lung function in CF patients by modulating or correcting dysfunctional CFTR genes. The biotech is evaluating new triple-drug combination therapies that hold even greater promise in helping CF patients.
Like Vertex, Galapagos is also developing triple-drug combos targeting CF. GLPG2737 is one of the three drugs included in a clinical study that's currently in progress. However, the failure of GLPG2737 to improve lung function probably dramatically reduces the chances for success of Galapagos' triple-drug combo.
AbbVie (ABBV +3.37%), Galapagos' partner, opted not to proceed with the development of a second triple-drug combo that also included GLPG2737. Galapagos said that it's "reviewing the future of its CF collaboration with AbbVie."
Vertex, meanwhile, is going full steam ahead with phase 3 clinical studies for two triple-drug CF combos. Two of the three components of both of these combos -- tezacaftor and ivacaftor -- are also components of Symdeko, which won approval from the Food and Drug Administration in treating CF earlier this year. The third drug in the triple-drug combos demonstrated overwhelmingly positive results in phase 2 clinical studies.
Now what
Vertex CEO Jeff Leiden wasn't too concerned about the potential competition from Galapagos and AbbVie when he spoke at the Cowen healthcare conference in March. He thought that his company's first-mover position would be enough to give Vertex a huge competitive advantage. However, you can bet that Leiden and the rest of the Vertex management team were thrilled to hear the results from Galapagos' clinical study.
The next steps for Vertex are to avoid having its own disappointment from clinical studies of its triple-drug combos. While there's always a risk that could happen, the biotech appears to be in great shape to announce positive data relatively soon. Vertex hopes to prepare regulatory filings for its triple-drug combos in treating CF patients with one F5808del mutation and one minimal function mutation based on four weeks of efficacy data and 12 weeks of safety data.
Unless there's a stunning setback, Vertex now appears likely to rule the CF market for the next several years. Investors can look for further catalysts as the biotech announces its triple-drug combo results and expands into new indications.
