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Vertex the odds-on favorite

Wall Street more than doubles Vertex valuation on odds of bigger CF franchise

Investors think there's still room to run for Vertex Pharmaceuticals Inc. (NASDAQ:VRTX), which saw its valuation more than double last week on positive Phase II data for a drug combination that could treat nearly half of the cystic fibrosis population.

Shares soared $24.61 (66%) to $62.02 on interim data for the company's VX-809 plus its Kalydeco ivacaftor to treat patients with two copies of the F508del mutation. The trial missed a primary endpoint of a reduction in sweat chloride levels, but met a secondary endpoint of a significant improvement in lung function (FEV1) (see B24).

Data from the trial's heterozygous arm are expected mid-year and final data from the entire study are expected in July.

The stock bump translated to a market cap increase of $5.2 billion to $13.1 billion. By comparison, Vertex's valuation added 15% ($1.2 billion) on positive Phase III data for Kalydeco in 4% of the CF population in February 2011.

Of the roughly 70,000 CF patients worldwide, an estimated 32,200 have two copies of the F508del mutation, while 23,100 have one copy. Only about 2,800 have the G551D mutation, for which FDA approved Kalydeco in January (see BioCentury, March 5).

According to a Vertex investor and a couple of analysts, the Street is figuring in as much as a 75-80%

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