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How Big Is Vertex's News for Its Potential Diabetes Cure?

By Keith Speights and Brian Orelli, PhD – Oct 28, 2021 at 7:01AM

Key Points

  • Vertex announced encouraging results from a phase 1 study of VX-880 in treating type 1 diabetes (T1D).
  • The results, however, included just one patient with life-threatening T1D.
  • Vertex's bigger opportunity could be with its encapsulated cell therapy program targeting T1D.

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The biotech reported encouraging results, but there's a long way to go.

Vertex Pharmaceuticals (VRTX -3.73%) recently announced positive results from an early stage clinical study of cell therapy VX-880 in treating type 1 diabetes. In this Motley Fool Live video recorded on Oct. 20, contributors Keith Speights and Brian Orelli discuss the significance of this news for an experimental drug that has been referred to as a potential cure for type 1 diabetes.

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Keith Speights: Well, Brian, let's switch to some non-COVID news. Vertex Pharmaceuticals announced encouraging results from a phase 1 study of its experimental cell therapy that has been touted to hold the potential to effectively cure type 1 diabetes in some patients. What's your take on these results, and how big is this data for Vertex?

Brian Orelli: This was an early stage study. It just had one patient with type 1 diabetes. That's the type that typically you get diagnosed with as a child. You don't have functional cells in the pancreas to make insulin. This patient was injected with cells that can make insulin, and then they acted fairly much like normal. They weren't producing insulin all the time. They responded to the fact that you ate food, and then that triggered production of insulin, which is exactly what the pancreas would do.

The patient went from needing 34 units of insulin per day to needing just 3 units. That's whatever 90-something percent drop in the need for insulin. Looking at HbA1c, which is a measure of long-term sugar levels, that went from 8.6% to 7.2%. Under 7% is basically the gold standard. Pretty close there, and the patient was obviously really high at 8.6. Getting close to 7.2 is definitely a step in the right direction.

As promising as this is, it's really only the first step. This was a half a dose and only 90-day data. They are obviously going to test the full dose, and then we obviously need longer data to know if the cells stick around and does it continue to help the patient. Do they even get better than this, or does it go down? Does the insulin production go down, and that means they need to start taking more insulin on their own?

Then obviously, it's not realistic to be a cure for most patients since by doing this, you have to undergo lifelong immunosuppressants, which cause their own risk. In this case, the patient had five potentially life-threatening hypoglycemics. That's low blood sugar level episodes. Obviously, the risk of not doing anything was counteracted by the risk of potentially getting an infection while on immunosuppressants. But the average type 1 diabetic who has their blood sugar levels fairly under control with their insulin probably isn't going to be able to justify taking immunosuppressants for the rest of their lives.

Vertex is working on an encapsulating version of the cells. That would allow them to evade the immune system, and they're looking to start a clinical trial with the encapsulated cells next year. I think that'll be the really telling thing here. This is very promising, but Vertex's shares were basically flat on the news, and I think that's reasonable. I think it's definitely good news and is a step in the right direction, but I think it's still too early to really put a valuation on it in terms of Vertex's share price.

Speights: While type 1 diabetes is not a rare disease, the initial focus for Vertex here is rare, and so they're going after a relatively small market. I think what you're talking about with the trial that they hope to start next year for encapsulated cells, if that's successful, then that could open up a really big market opportunity for Vertex.

Orelli: I agree.

Keith Speights owns shares of Vertex Pharmaceuticals. The Motley Fool owns shares of and recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.

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