GILD Gilead Sciences Inc

Vertex Pharmaceuticals Inc. (VRTX) recently announced that the US Food and Drug Administration (FDA) approved Incivek (telaprevir) to be used as a treatment of hepatitis C virus (HCV), in both treatment-naïve and treatment-failed patients.

The approval was based on data from three phase III studies, which demonstrated that patients who received Incivek combined with pegylated-interferon and ribavirin achieved significantly higher rates of sustained viral response (viral cure) compared to those who received pegylated-interferon and ribavirin alone, irrespective of treatment-naïve or treatment-failed populations.

Incivek’s approval does not come as a surprise for Vertex Pharma as last month the FDA’s Antiviral Drugs Advisory Committee unanimously voted in favor of approving the drug as a treatment for HCV.

Vertex Pharma has exclusive US commercialization rights to Incivek and has joined hands with Johnson & Johnson (JNJ) and Mitsubishi Tanabe Pharma for the commercialization of the drug outside the US. While Johnson & Johnson is responsible for the commercialization of Incivek outside North America and the Far East, Mitsubishi Pharma will market it in certain areas of the Far East including Japan.

The drug is currently under regulatory review in the European Union and Canada. Johnson & Johnson anticipates a response from the European regulatory body in the second half of 2011.

Vertex Pharma will face competition for Incivek from Merck & Co.'s (MRK) Victrelis (boceprevir), a similar protease inhibitor molecule, which was approved by the FDA recently. The drug has also been recommended for approval by the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA).

Meanwhile, companies like Boehringer Ingelheim, Gilead Sciences Inc. (GILD) and Roche Holdings Ltd. (RHHBY), all have pipeline candidates for the treatment of HCV.

Our View

We currently have a Neutral recommendation on Vertex Pharma, which carries a Zacks #3 Rank (short-term Hold rating). The approval of Incivek is a major positive for Vertex Pharma.

The company is banking heavily on Incivek for growth as it does not market any drug presently and books revenues in the form of royalties and collaborative revenues.

 
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