Vertex Pharmaceuticals saw its stock rocket on news earlier this month that its two-drug combo treatment for cystic fibrosis showed a strong benefit in a clinical trial, but the stock is coming back down now that Vertex has come forward to report on a mistake in its own data.
Shares of the Cambridge, MA-based biotech company (NASDAQ: [[ticker:VRTX]]) fell 21 percent to $51.32 in early trading today. While that’s a steep drop, it really represents only a partial decline for a very hot month, as the company climbed 55 percent on May 7 when it announced the original results of a clinical trial assessing a couple of drugs for cystic fibrosis in patients with the most common genetic forms of the disease.
All the consternation was stirred by one of the most common mistakes people make in reporting on statistics—the difference between absolute benefit and relative benefit. Vertex reported on May 7 that its combo of VX-809 and ivacaftor (Kalydeco) was able to produce at least a five percentage point absolute improvement in lung function after 56 days in 17 of 37 patients (46 percent of the total group). Even better, the company said the combo helped 11 of the 37 patients (30 percent) achieve a 10 percentage point absolute improvement in lung function, while none of the 11 placebo patients got to either threshold of lung improvement.
Today, Vertex said it was mistaken when it reported the improvement in absolutes, and those numbers actually represent relative improvements for the patients. When Vertex analyzed the data a second time, it came away with more modest numbers. Only 13 of the 37 patients (35 percent) got to the five percentage point absolute improvement mark, and 7 of the 37 patients (19 percent) improved enough to show a 10 percentage point absolute improvement. The average improvement in absolute lung function was 8.5 percentage points for patients on the drug, compared to a placebo.
While it’s common to express medical evidence in relative terms, some doctors prefer to express such clinical trial data in absolute terms, so as not to exaggerate and generate false hope among patients. For example, a drug that lowers the absolute risk of colon cancer over five years from 1 in 3,000 to 1 in 6,000 is offering an advantage. But expressed in relative terms—as pharmaceutical advertisers certainly would—it looks like a much bigger deal, as a 50 percent lower risk of getting colon cancer over five years.
In the case of this cystic fibrosis data, the difference between absolute and relative isn’t so stark, but it’s still a difference, and caused investors to re-evaluate how much of an impact Vertex may be able to make for cystic fibrosis patients. Also, the data being reported on today is still from an interim analysis, not the final analysis, and the overall trial is scheduled to enroll more patients, a total of 108.
Mark Schoenebaum, an analyst with ISI Group, said in a note to clients earlier today that the cystic fibrosis patients studied in the placebo group appeared to decline faster than expected—a 4.6 percentage point absolute drop in lung function in 56 days—which helped the drug show a clear advantage over the placebo. But even considering that lucky break for Vertex, and the more modest statistics it is reporting today, he says the combo still looks impressive.
“If placebo had behaved more in-line with expectations (decline of 1-2%) then the combo’s absolute improvement from baseline vs placebo would have been 4-6%, which IS STILL WELL ABOVE ORIGINAL STREET EXPECTATIONS!” Schoenebaum wrote in a note to clients (his capital letters). “Don’t get me wrong—I’m not trying to sugarcoat what is a sort of ‘downward revision’ to the data today. But I am saying that the data still show activity.”
Besides the investment community, these data mean a lot to the cystic fibrosis community. Cystic fibrosis, the result of mutations to a gene called CFTR, causes the poor transfer of water and salt across cell membranes, which leads to the buildup of thick, sticky mucus in the lungs. That effectively suffocates people over time, and often ends up killing people in their late 30s or early 40s. Doctors have made significant progress over the years through improved treatment of CF symptoms, but in January, Vertex’s ivacaftor became the first FDA-approved therapy that works by targeting the CFTR protein directly; the drug helps prop open these cellular gateways to allow better transport of ions across cell membranes.
The problem for most people with cystic fibrosis, though, is that their genetic form of the disease prevents CFTR proteins from getting close enough to the cell surface to benefit from the effect of ivacaftor. That’s why VX-809 is important in combination with ivacaftor. It is supposed to work by helping shuttle the CFTR protein toward the cell surface, where ivacaftor is opening the doors to effective transport. If the two drugs are found to be effective together, it could be expand the benefits far beyond the roughly 4 percent of CF patients who can benefit from ivacaftor alone.
Vertex, in today’s statement, repeated that the clinical results still exceed its expectations, and that it is still planning to advance to the third and final phase of clinical trials usually required for FDA approval.
