Tuesday, January 15, 2008

Lesson from the JPMorgan Conference: Exceptions That Prove the Rule

Look both ways before you cross The Street
Roger Longman's earlier post about biotech hype got us thinking about a few conversations we had and presentations we watched last week, the way the financial markets respond to--or don't respond to--the optimism of chief executives, and how sometimes that optimism turns out to be quite warranted.

For example it seems like every year we sit down at the St. Francis on Day One and listen to Celgene chairman/CEO Sol Barer, PhD, promise the world to the room chock-full of investors. This year that promise was more stratospheric growth for the company's blockbuster Revlimid, even in the face of competition from Millennium's Velcade.

And you know what we thought to ourselves this year when a once-again upbeat Barer suggested that "in many ways we are at the beginning of Revlimid's commercialization," then threw up a slide crammed with ongoing or planned studies of the blockbuster and guided that sales at the firm would jump to $1.8 billion from $1.4 billion? We thought well why the hell not? Celgene keeps delivering. Barer didn't even have to mention the company's acquisition of Pharmion to get investors excited; that deal, and Pharmion's products, barely registered during his spiel.

That said, skepticism has to be the default view when countered with the overwhelming optimism that characterizes the hype Roger wrote about last week. And in today's R&D and regulatory climate (the results of which we've well documented) it's relatively easy to be a skeptic. Technologies may be fascinating and drugs may be promising (we heard about our share of fascinating technologies and promising drugs last week, for sure), but in the end most technologies don't end up churning out dozens of drug candidates for one reason or another and most drug candidates themselves fail. That's simply just the way it is.

But then there are the Celgenes of the world. And maybe the Vertexes? We sat down with Vertex Pharmaceuticals CEO Joshua Boger, PhD, at the JP Morgan conference to talk about telaprevir (née VX-950), its leading HCV protease inhibitor. (We won't go into the specifics of the massive HCV opportunity here, but note we've covered the area pretty extensively in the past in this IN VIVO feature and this shorter piece on Vertex's landmark ex-US deal for telaprevir with J&J's Tibotec, among other pieces.)

Vertex's stock has been pummelled by Wall Street in recent months following the interim analyses of its first two large Phase IIb trials of telaprevir last November. Those trials have so far established telaprevir, which is further along than any other experimental direct antiviral in HCV, as a potential breakthrough therapy in HCV. The company's stock fell because even though the interim look suggested the drug would find a place in first line HCV therapy (SVR rate at 24 weeks was 61% in the first trial, 65% in the second), given the confidence Vertex displayed in the molecule's prospects--and the sheer size of that J&J deal--one could be forgiven for thinking telaprevir was going to do better. And then make you a sandwich and wash your car.

And then there are the concerns about the drug's thrice-a-day administration that we have heard from other observers, who suggest that even if Vertex is first to market by a couple years, HCV patients might wait for something more convenient. They've waited for years already, in some cases, why not another year or two?

Boger seemed weary of explaining the fallacy of this argument but gave it a go for us anyway. "There are a lot of amateur market opinions," he said, and people are confusing HCV treatment with HIV treatment: the latter is a chronic, for-the-rest-of-your-life regimen, but the former could be shortened to less than six months with the addition of telaprevir to existing interferon and ribavirin standard of care (currently a 48-week therapy). Vertex's critics "couldn't be more wrong," he said. "This isn't a chronic condition where you take the drugs forever--this is a cure."

Vertex hasn't seen a compliance issue in its clinical trials, Boger maintained, and even if it would be nice to have a protease inhibitor with twice-a-day or once-a-day administration, he said, it wouldn't be as a means to boost compliance. Rather it would be easier to combine a twice-a-day drug with other direct antivirals that could follow telaprevir to the market, such as an HCV polymerase inhibitor.

And as for patients waiting for a better drug, Boger bristled and chalked that up to wishful thinking from competitors. HCV is a case where a drug that makes the first leap in patient benefit will define future drugs' clinical and regulatory pathways, he said, plus take the lion's share of pent-up market demand that will never exist again. "I've never seen a field where the potential of being first to market is this big," Boger said.

Is that more hype? And has Vertex's own hype come back to bite it recently? Maybe, but that doesn't mean they won't succeed with telaprevir. We wouldn't bet against them.

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