Vertex Pharmaceuticals ($VRTX) achieved another major milestone with FDA's approval of its cystic fibrosis therapy Kalydeco. The "breakthrough" product is the first to address CF's cause instead of just its symptoms, the FDA's Janet Woodcock pointed out in announcing the new drug. Adding to the excitement: Kalydeco's approval came more than two months ahead of deadline.
However, now that it has aced its FDA test, Kalydeco has to conquer the market. It's a small market, too: Kalydeco targets a defective protein implicated in only 4% of cystic fibrosis cases. With about 30,000 U.S. patients overall, that gives Vertex only about 1,200 with the responsible mutation, known as G551D. So, Kalydeco has a stiff price tag--$294,000 per year--and a raft of programs to help cover the cost.
About 60% of the eligible patients have commercial insurance, while government programs will cover the remainder. Vertex's co-pay assistance program will cover up to $88,000 of patients' co-insurance or co-payments, The Wall Street Journal reports. Patients will also have case managers to help them navigate payer bureaucracies.
With its current label, analysts are figuring Kalydeco will deliver more than $500 million in sales. Vertex is testing two different combinations, each pairing Kalydeco with a different experimental drug, and if those combos prove successful, then use could expand to up to 90% of CF patients. And that would turn Kalydeco into a blockbuster with peak sales of up to $4 billion.
Kalydeco is Vertex's second approved product after last year's Incivek, an innovative hepatitis C treatment that's on track to become a blockbuster faster than any other drug. As Reuters points out, investors were starting to worry Incivek would peak quickly and then suffer as hep C competition grows. As the lead-in to a CF franchise, Kalydeco helps address that risk. "Our view has been that this company is a short-term hepatitis C story that's funding a long-term global business in cystic fibrosis with options for other opportunities," Sanford Bernstein's Geoffrey Porges told the news service.