Shares of drug maker Vertex Pharmaceuticals (NASDAQ:VRTX) crashed as much as 38% this morning after the company and partner Aventis (NYSE:AVE) announced they were suspending phase 2b trials of their rheumatoid arthritis treatment candidate, Pralnacasan, and Vertex announced Q3 results showing revenues off 46% versus last year.
CEO Joshua Boger said on the conference call (which we reviewed via a transcript from CCBN/StreetEvents) that animal toxicity studies showed some liver fibrosis and that the companies would study the data to determine how to proceed, which could delay Pralnacasan trials for rheumatoid arthritis up to 12 months. Aventis is studying the Pralnacasan phase 2 trial data for osteoarthritis and may initiate trials of the drug for psoriasis.
With Vertex sales declining 15%, 46%, 58%, and 46% year over year for the last four quarters, it needs product sales. It has has two drugs on the market, HIV treatments Agenerase and just-approved Lexiva, marketed by partner GlaxoSmithKline (NYSE:GSK), as well as a full drug development pipeline of candidates both led by large pharmaceutical company partners and by Vertex.
But no candidates are currently in phase 3 trials, the last stage before a company usually seeks FDA approval to market the drug, though Vertex says it will advance an oral hepatitis C drug to phase 3 next year. That means at least several years before it could have another product on the market. Thus the stock slam.
Vertex burns about $150 million a year, so without new revenues its $534 million. in cash and marketable securities as of Sept. 30 would last a little over three and a half years. In the earnings release yesterday, the company said it "is currently in discussions with pharmaceutical companies regarding strategic research and product development agreements, and the timing and successful conclusion of such discussions may result in additional revenue and cash flow in 2003." We're not calling this money in the bank yet.
In 2001, the company signed a deal with big pharma Novartis (NYSE:NVS) worth up to $800 million. Novartis' decision last year to establish and spend $250 million on a research and development center in Cambridge, Mass., was viewed in part as an effort to be closer to Vertex.
All we can say is that Vertex stock is still quite a speculation -- but a much cheaper one than yesterday.
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