Data Reporting Mistake Hits Vertex Pharmaceuticals' Stock
Posted 29 May 2012 | By
Hell hath no fury like a Wall Street analyst scorned.
Or at least that's what Cambridge-based Vertex Pharmaceuticals might be thinking to itself today after admitting it had inadvertently overstated the effectiveness of its new combo therapy for cystic fibrosis (CF), causing shares of Vertex ($VRTX) to plummet.
Vertex has been testing the new therapy, which consists of its already-approved drug Kalydeco (ivacaftor) and a new experimental compound known as VX 809. Unlike Kalydeco, this combination therapy would apply to a much broader spectrum of CF patients instead of just those suffering from a specific gene defect.
Vertex originally reported 46% of patients participating in a phase II trial for the combo therapy experienced an improvement in lung function of 5% or more, while 30% experienced an improvement of 10% or more.
Vertex revised those figures downward in a 29 May announcement, saying a miscommunication between Vertex and an outside analysis firm led them to communicate the terms as absolute improvements instead of relative improvements.
The revised data showed 35% of patients experienced an improvement of more than 5% and 19% experienced an improvement of more than 10%.
Results of an interim analysis were also released from the phase II trial, showing a statistically significant mean absolute improvement in lung function of 8.5% relative to the placebo group
The company said it still plans to proceed with a planned Phase III study of the combo therapy, but Wall Street registered its disapproval with the announcement-loudly. Shares in the company were down more than 14% just five hours after its announcement after bottoming out earlier at a loss of 22.68% in premarket trading.
Vertex - Press Statement
The Street - Vertex Overstates Cystic Fibrosis Drug Benefit
Xconomy - Vertex Shares Drop on Mistake in Cystic Fibrosis Drug Data
Forbes - Cystic Fibrosis Data That Sent Vertex Stock Soaring Were Incorrect
Pharmalot - Oops! Vertex Revises Cystic Fibrosis Study Data