An FDA advisory panel this afternoon recommended approval of a new combination treatment for cystic fibrosis from Vertex Pharmaceuticals, potentially paving the way for billions of dollars in future sales if the agency ultimately approves the drug.
The panel of outside experts voted 12 to 1 in favor of a CF therapy Boston-based Vertex (NASDAQ: VRTX) aims to sell under the brand name Orkambi. While the FDA isn’t required to follow such recommendations, it usually does. The agency is expected to decide on the Vertex drug by July 5.
The panel’s recommendation was widely expected—and is a crucial milestone for Vertex, because bringing the treatment to market should finally make the nearly three-decade old company sustainably profitable.
Vertex’s short run as a hepatitis C powerhouse, which began with the approval of telaprevir (Incivek) in 2011, was ended by a new wave of treatments in 2013. Vertex exited the field altogether the following year. The company has since pivoted and rallied around an emerging CF franchise. FDA approval of Vertex’s ivacaftor (Kalydeco) in 2012 was a landmark decision in the battle against CF, a disease that causes a buildup of thick mucus in the lungs, a host of other health problems, and often, an early death.
Ivacaftor is the first drug to treat underlying molecular abnormalities present in certain CF patients. It essentially works by helping open up cellular channels that shuttle water and salt across cell membranes, which in turn is supposed to lessen the troublesome buildup of mucus. Before ivacaftor, the only available treatments managed patients’ symptoms, but didn’t affect the functioning of the faulty channels.
While the number of patients eligible to use the drug is small—ivacaftor is approved for a group of patients with certain genetic mutations who make up about 4 percent of the overall CF population—the price tag isn’t: ivacaftor costs $311,000 per patient, per year. And that drug is just the start for Vertex, which has been developing other drugs behind ivacaftor all meant to expand its reach, treat more and more CF patients with different genetic traits, and effectively dominate the treatment landscape.
Lumacaftor is a huge part of that strategy. What’s being branded as Orkambi is a pill that combines lumacaftor with ivacaftor in a bid to treat patients 12 years or older with the most common form of cystic fibrosis, caused by having two copies of a genetic mutation known as F508del. About half of the roughly 70,000 people with CF worldwide have this form of the disease (roughly 8,500 in the U.S. have this form and are 12 or older), and ivacaftor isn’t approved to treat them. Those patient numbers for a chronic therapy, likely with a high price tag, mean billions of dollars are at stake. Barclays analyst Geoff Meacham, for instance, estimated $5.5 billion in peak annual sales for lumacaftor/ivacaftor, should it hit the market. By comparison, ivacaftor generated $464 million in sales last year—and Vertex had a net loss of over $500 million.
What experts wrestled with today were the exact benefits that lumacaftor brings to the table. Vertex contends that the F508del mutation essentially stifles ivacaftor; it stops a key protein from getting to the cell surface, which means that critical transportation of water and salt can’t happen. Lumacaftor is supposed to get that protein moving, so ivacaftor can make an impact.
FDA scientists questioned that theory. In a briefing document the agency wondered whether lumacaftor “contributes any added benefit” over ivacaftor alone, and whether Vertex’s study would’ve succeeded if the combination therapy had gone up against ivacaftor and not a placebo. In Vertex’s two Phase 3 tests, known as “Traffic” and “Transport,” lumacaftor/ivacaftor led to a statistically significant increase in a measurement of patients’ lung function—around 2.7 to 3 percent after six months–compared to placebo. In earlier, smaller studies cited by the FDA, ivacaftor on its own led to a 1.7 percent benefit after four months.
Of course, cross-trial comparisons are always inexact. But the FDA team nonetheless said that it “could not exclude with any level of confidence” that the combination was better than ivacaftor alone and questioned whether a study should be done to test one against the other (ivacaftor’s current label states that it isn’t effective in patients with two copies of the F508del mutation). That argument was the crux of today’s panel meeting.
Despite the FDA’s questions, analysts generally expected a positive vote. As RBC Capital Markets analyst Michael Yee wrote in a recent research note, the combo therapy has shown “clinically meaningful differences” not just in lung function, but the rate of hospitalizations for CF patients, and “that’s actually what all docs say is meaningful.”
Vertex hammered that point home at today’s meeting, noting how “exacerbations,” or episodes of worsening respiratory symptoms (like coughing and shortening of breath) can lead to hospital stays and speed the course of the disease, and that lumacaftor/ivacaftor succeeded in lowering them. Additionally, there is no other approved therapy for F508del patients to fall back on.
Still, even if lumacaftor/ivacaftor does win approval, a big battle lies ahead. Payers will be closely watching the drug’s price tag. Vertex hasn’t disclosed an expected price, but analysts expect it to be similar to ivacaftor—a much bigger burden to payers given how many more patients the drug would be able to treat. That looming debate over pricing and reimbursement for the treatment could be one of the bigger biotech stories of 2015 should Vertex’s drug reach the regulatory finish line.
Shares of Vertex were suspended today during the panel. They closed at $124.08 apiece on Monday, and climbed around 9 percent, to $135.70, during after-hours trading on Tuesday.