Yesterday, Rule Breakers pick Vertex Pharmaceuticals (NASDAQ:VRTX) released its third-quarter financial results and updated investors on the progress with its pipeline.

The most interesting revelation from the conference call and earnings release was that Vertex is planning on advancing a second-generation protease inhibitor into the clinic by the end of 2007. This is a smart move, since viral resistance is likely to occur in some subset of patients infected with hepatitis C virus (HCV) and treated with its lead drug candidate telaprevir.

On the conference call, Vertex's management said it was looking to build a pipeline of anti-HCV products. However, it's not clear if this was just a comment about the second protease inhibitor, or an indication that Vertex would start developing compounds targeting the other steps of HCV life cycle, like polymerase inhibitors.

If Vertex is looking to build a portfolio of HCV-fighting drugs along the lines of Roche or Gilead Sciences (NASDAQ:GILD), then it's likely going to have to do the drug development work in-house rather than by signing partnership deals, as there are few unpartnered promising clinical stage HCV antiviral compounds available. Or it could just sign a deal for Flamel Technologies' (NASDAQ:FLML) improved interferon drug candidate.

If Vertex does develop drugs targeting different aspects of the hepatitis C virus and its second protease inhibitor treatment is successful, it will help to cement Vertex's leading role in antiviral drug development. There's also the possibility that Vertex's second protease inhibitor could be more potent or have fewer side effects than telaprevir. That's something that would keep the cash rolling in for a long time.

More Foolish thoughts on HCV:

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.