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Vertex Nucleotide Analysis
  July 31 2012
William Blaire securities
Y. Katherine Xu, Ph.D.

Monday July 30 after markets closed, Vertex reported the long-anticipated viral kinetic data from one of the two Alios nukes. In a monotherapy study in genotype 1 (GT-1) patients, ALS-2200 demonstrated initial potency that appears to match that of GS-7977, the current nuke class leader. Should 12-week safety of ALS-2200 hold up, ALS-2200 could serve as a backbone for Vertex's future all-oral combination regimens, and put Vertex in position to initiate Phase III studies by year-end 2013. We summarize the ALS-2200 data together with other nukes in exhibit 1.

Potency matches GS7977. At the highest dose tested, 200 mg once daily (QD) ALS-2200 monotherapy led to 3.85 log drop in viral load at 3 days and 4.54 log drop at 7 days. This compares with 3.4 log drop at 3 days and 4.7 log drop at 7 days for GS-7977 at 400 mg QD, the dose that is used in all the later-stage studies. Higher doses of ALS-2200 will likely be explored in the future.

Data from the other nuke ALS2158 to be revealed in the next two months. The other nuke candidate ALS-2158 will report viral kinetic data within the next two months or so, by our estimation. Should ALS-2158 produce similar or even slightly lesser results, Vertex might have an internal nuke+nuke combo that could be pan-genotypic.

Next are a series of small combination Phase II studies of ALS2200 to build safety database and explore efficacy; 12 week safety is bar. Vertex plans to conduct a series of small Phase II studies of ALS-2200+Incivek, ALS-2200+ribavirin (R), and ALS-2200 in combination with compounds from other classes, as well as other companies, in GT1 patients. The goal is to build up the safety database of ALS-2200 to several hundred patients and characterize 12-week safety, as the 12-week treatment duration is what the industry is gravitating toward.

Phase III studies are possible to start before year end 2013, a timeline that positions Vertex well in the HCV race for all oral regimens. Vertex plans to initiate Phase III studies of oral regimens in parallel, likely before year-end 2013. Should this timeline be achieved, Vertex would be among the front runners in the race of all-oral regimens. The composition of the regimen(s) to be taken into Phase III depends on data to be obtained over the next 12-15 months.

Conclusion: Initial indication of potency of ALS2200 is strong, and with data anticipated from ALS2158, the Alios nukes could put Vertex back into the HCV race. Although Vertex previously reported data from the ZENITH study where its first all-oral combination Incevik+VX-222+ribavirin for 12 weeks produced reasonable cure rates, we do not believe such a combo would be competitive, given the highly competitive nature of the HCV race. To maintain a reasonable market share in the long term, Vertex needs potent and safe product candidates with better dosing convenience, and the Alios nukes are the key to such hope; we note that Vertex in-licensed two nuke candidates from Alios in 2011. Now ALS-2200 demonstrated >4 log viral load drop, which could rival the leader in the class, Gilead's GS-7977. Further, the two Alios nukes could also form a nuke+nuke combo, a feat only Gilead could have accomplished before PSI-938 was put on clinical hold in December 2011. Such nuke+nuke combo could be a Holy Grail contender.

Vertex Announces Positive Results from Viral Kinetic Study of the Nucleotide Analogue ALS-2200 in People with Hepatitis C - (07/30/12)

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