Vertex Shares Rally As FDA Panel Backs Orkambi; HC Wainwright Analyst Offers Thoughts

H.C. Wainwright commented on Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) Wednesday following the FDA AdCom endorsement to approve Orkambi as the stock surged over 5 percent in pre-market trading.

Analyst Andrew S. Fein believed that since the Phase 3 win and going into the AdCom, “the Street had generally continued to assume smooth regulatory sailing for Orkambi, with the approval being already priced into shares well ahead of the launch expected later this summer.”

Fein noted, however, that “while the ‘topline tally’ was 10-1 in favor of approval,” the firm’s “recalculated tally according to the panelists’ stated voting motives was only 8-5 in favor” due to discomfort or difficulty over the vote and in the “interest of giving patients and the field a possible therapeutic option.”

The analyst did not think the above would prevent U.S. approval, although debate could arise on the “attribution of benefit to the Kalydeco component” of the treatment “during EMA review and definitely during ex-US reimbursement negotiation.”

Shares of Vertex traded recently at $129.04, up 4 percent.

Surprise of AdCom

Fein indicated that a surprising aspect of the AdCom was “the company’s rather flatline defense against the FDA’s case for Orkambi vs. Kalydeco benefit.”

The analyst offered a hypothesis on this issue and saw it as an outlier “on the efficacy of Orkambi in F508del,” which Fein had addressed in the past, namely that the clinical efficacy of the combo was “primarily due to its Kalydeco component” and that the “Kalydeco efficacy is downstream of anti-inflammatory action, and not downstream of CFTR modulation.”

Outlook

Looking ahead, Fein believed that “as competitors gain comfort and critical mass” in the Cystic Fibrosis space by leveraging Vertex,  they would “eventually also generate competitors to Orkambi itself.”

Overall, Fein found that “what the AdCom chairman gave as a reason for his Yes vote in favor of Orkambi is both ironic and prophetic: he voted on faith hoping that an approval leads to more investments and better therapeutic options” in the Cystic Fibrosis space.

The firm maintained a Neutral rating on the stock and an $85 price target.