Cystic fibrosis affects 75,000 people in North America, Europe, and Australia, but it isn't a one-drug-fits-all kind of disease. Different mutations in the cystic fibrosis transmembrane conductance regulator, or CFTR gene, result in different problems with the protein, causing a build-up of mucus in patients' airways, intestines, and ducts of the pancreas.
Vertex Pharmaceuticals (NASDAQ:VRTX) might only have a slice of the cystic fibrosis drug business at the moment, but it's looking to eat most of the pie.
The company used this slide in their JP Morgan Healthcare Conference presentation on Monday to illustrate the point:
The company only has one cystic fibrosis drug on the market, Kalydeco, which treats patients represented in the blue section of the above pie chart. In these patients with G551D, R117H and eight other mutations of the CFTR gene, the protein can make it to the cell surface, but the channel doesn't open properly. Kalydeco helps to keep the gate open, allowing salts to pass through, reducing mucus buildup, and increasing patients' ability to breathe.
Vertex believes it can achieve Kalydeco sales of between $560 million and $580 million this year. That's up substantially from approximately $460 million in 2014 thanks to approvals for use in patients with additional mutations -- represented by the light blue sliver on the pie chart -- and increasing reimbursement for G551D mutations for which it was first approved.
As green as money
That green pie slice -- patients with two copies of the CFTR F508del mutation -- covers about half of the cystic fibrosis population. The mutation prevents the CFTR protein from reaching the membrane, so Kalydeco, which goes by the generic name ivacaftor, can't help F508del patients on its own. F508del patients need both lumacaftor, which helps the protein get to the surface, and Kalydeco to open the gate.
The combination helped patients breathe better in a couple clinical trials and is under review by U.S. and EU regulators. The FDA is expected to decide by July 5 whether to approve the combination -- and that could come earlier, considering the agency approved Kalydeco three months before its goal. In the EU, the combination is getting an accelerated assessment, so a decision this year seems likely.
Vertex also has a second drug in development, VX-661. We don't have the critical phase 2 data yet, but CEO Jeff Leiden said in Monday's presentation that the company plans to push a combination of VX-661 and Kalydeco into phase 3 development. It appears Vertex is convinced the combination works even if the phase 2 data isn't polished enough for public consumption.
Vertex is also testing the VX-661/Kalydeco combination on some of the mutations represented in the orange section, in which patients have one copy of the F508del mutation from one parent and a different mutation on the copy they inherited from their other parent.
To get at the rest of the patients in the orange section, Vertex might have to add more drugs to the cocktail; it has a next-generation corrector ready to enter the clinic this year.
Even if Vertex can capture the whole pie, there's potential for increasing revenue by adding additional drugs to the combinations to increase efficacy.
We'll have to wait and see if that's easy as cake or a pie in the sky dream.
Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Vertex Pharmaceuticals. The Motley Fool owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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