Vertex CEO says its competitive edge is honed and ready for AbbVie's cystic fibrosis grab

Vertex Pharma
For the third quarter, Vertex's cystic fibrosis product revenues jumped 42% year over year, to $783 million. (Vertex)

When a pharma giant marketing the world’s best-selling drug doubles down on a therapeutic area, a smaller specialist might well feel the pressure. But Vertex doesn't seem to feel that way about AbbVie’s new investment in cystic fibrosis.

Instead, Vertex Chairman and CEO Jeff Leiden said Wednesday that its “competitive position has improved over the last year significantly,” even as AbbVie is paying Galapagos $45 million upfront to gain full global rights to the Belgian company’s entire CF portfolio.

The reason? In Leiden’s own words on the company’s third-quarter earnings call, “the data speaks for itself.”

AbbVie’s decision to revamp its Galapagos collaboration into a takeover deal confused some analysts. It's true that the Big Pharma is looking to diversify from Humira as its U.S. patent cliff nears, but recent data weren’t exactly favoring Galapagos' drugs.

Back in June, AbbVie itself had decided pairing GLPG2737 with Vertex’s Orkambi didn’t work as expected. And top-line results from a phase 1b unveiled yesterday showed a Galapagos dual combination of GLPG2451 and GLPG2222 achieved only 3% improvement in a lung function measure after two weeks, and adding GLPG2737 didn’t help.

However, in a Wednesday note to investors, Bernstein analyst Wimal Kapadia read the early results as “encouraging,” mainly because the combos put up solid safety profiles. On the other hand, the analyst admitted that serious side effects often don't crop up until larger, later-stage studies.

Meanwhile, because the new data came from an early, small test, he cautioned against reading too much into the efficacy numbers. And he noted that moving forward with a triple combination without testing the double first was a risky strategy from both development and regulatory perspectives.

RELATED: AbbVie buys Galapagos’ cystic fibrosis assets despite weak data

In contrast, Vertex already has an approved double therapy, Symdeko, as the base of its triplets. Vertex is looking to file for at least one approval no later than the middle of next year, and another triple regimen is also further down on the development trail, Leiden said on the Wednesday call.

As Leiden sees it, the CF market is all about triplets to get to all patients. Its triplet combos “are co-formulatable, they do have the right [pharmacokinetics], they’ve raised the bar in efficacy very significantly into the double digits for the het/min patients”—who are more difficult to treat—“and even into the mid double-digits for the homozygous patients,” he said. “That's going to be the bar, I think for the future.”

Vertex will enjoy a CF monopoly at least for some time. Its third-quarter revenue was $784 million, a 42% increase over last year's third quarter and 2% higher than analysts had expected, Leerink analyst Geoffrey Porges wrote in a Thursday memo.

Porges said the Symdeko launch is driving Vertex’s penetration and “this momentum should continue over the next few quarters,” but at the same time, he dialed down his ramp-up estimate for the drug because of lagging reimbursement negotiations in major ex-U.S. markets.

RELATED: ‘Sham’ or public interest? ICER suggests 70%-plus discounts on Vertex’s cystic fibrosis drugs

Berstein’s Kapadia expects some headwinds further down the road, mainly from pricing pressure, and some early signs have already emerged in the U.S. Drawing a comparison with the hepatitis C market for Gilead, Kapadia said, “any new entrants could disrupt the pricing structure,” and that “[a] new triple, even if not quite as good, will allow payers to squeeze prices across the board.”

Citing an expert in CF, Kapadia said Vertex doesn't appear to have built up much brand loyalty, so if AbbVie’s triplet shows it works, even somewhat, it will still capture share, “especially with the right price,” even if it cannot become the market leader.

Can AbbVie relive its HCV success from Mavyret in the CF world? Of course, it remains to be seen. Kapadia has for now projected peak sales of $1.3 billion in 2030 for AbbVie's putative CF franchise, a small figure compared with Vertex.