On Monday, drugmaker and Rule Breakers pick Vertex Pharmaceuticals (NASDAQ:VRTX) announced financial results for the first quarter. Vertex had a fairly eventful first quarter, with all the excitement about the company and its lead compound, the hepatitis C (HCV) drug candidate telaprevir, occurring in just the last two weeks.

Development of telaprevir continued apace in the first quarter, with Vertex initiating another phase 2 study of the drug, dubbed Prove 3, in February. Vertex expects the Prove 3 trial to complete enrollment of 440 patients by the end of the second quarter. While Prove 3 is not as important in gaining regulatory approval as results from the recently announced Prove 1 trial, Prove 3 offers the chance to significantly expand telaprevir's use (if it can get approved) into the 50% or so of patients who fail to show a benefit after taking HCV drugs like the two leading compounds from Roche and Schering-Plough (NYSE:SGP).

After Vertex signed a development deal with Johnson & Johnson (NYSE:JNJ) last year that will dramatically cut Vertex's R&D expenditures now that JNJ will be paying for half of all of telaprevir's development costs, Vertex's cash position and balance sheet are in very strong shape. At the end of the first quarter, Vertex had nearly $700 million in cash and equivalents, with ending cash balances for the year expected to be around $450 million.

Vertex has about as good a job as is possible in rapidly moving telaprevir through clinical trials and later-stage testing. If all goes to plan, phase 3 trials of telaprevir will begin in the fourth quarter of 2007. If the Prove 2 and 3 results are as positive as the Prove 1 data was, Vertex remains in great shape to be the first biotech to have an HCV protease inhibitor on the market.

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Johnson & Johnson is an Income Investor recommendation.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article.