The targeted nature and ultra-orphan setting for Vertex Pharmaceuticals Inc.’s cystic fibrosis medication Kalydeco means that the company will be able to launch the groundbreaking therapy, its second commercial product, with a small force and still achieve significant success on the market.

FDA announced the approval of Kalydeco (ivacaftor, VX-770) for a subpopulation of cystic fibrosis patients on Jan. 31, more than two months ahead of the drug’s PDUFA date. One of the quickest FDA approvals seen in recent years, the nod gives Vertex a second marketed drug, following Incivek (telaprevir), a protease inhibitor for hepatitis C that was approved last May.

Kalydeco is expected to be a paradigm-changer in CF because it is the first drug to treat the cause of the disease, rather than just its symptoms. Aimed at a genetic defect underlying the disease, Kalydeco is indicated to treat only those CF patients six and older who test positive for the G551D mutation of the cystic fibrosis transmembrane conductance regulator (CFTR) gene.

Though 70,000 people worldwide and 30,000 in the U.S. have cystic fibrosis, the G551D mutation is found in only 4% of patients.

The orphan disease is one with an extremely organized community; The Cystic Fibrosis Foundation was partnered with Vertex on the drug’s development, and will receive royalties on sales. But the awareness and the existing relationship should also give the company a head-start on launch.

Vertex has about 50 staff focused solely on Kalydeco – this will include a commercial team of 14 therapeutic specialists who will detail the product to clinicians and seven case managers who will provide one-on-one assistance to patients. Because most U.S. CF patients are treated within a system of 100 accredited care centers, Vertex will distribute Kalydeco mainly through a limited network of specialty pharmacies.

While that is easier for the company, it does mean that IMS Health Inc. will have little access to prescribing trends for Kalydeco since most specialty pharmas do not share data with the service, Vertex Chief Commercial Officer Nancy Wysenski noted during a Jan. 31 investor call on the approval.

The announcement came just two days before Vertex was slated to report its fourth-quarter 2011 earnings data and also on the final day of outgoing CEO Matthew Emmens’ tenure. The Cambridge, Mass.-based biotech announced in December that current board member and former Abbott Laboratories Inc. executive Jeffrey Leiden would succeed Emmens on Feb. 1 Also see "In One Day, Change At Biotechs: Leiden To Replace Emmens At Vertex And At Amgen, Bradway Will Become CEO" - Pink Sheet, 15 December, 2011.. At Abbott, Leiden helped oversee the launches of rheumatoid arthritis drug Humira (adalimumab) and HIV drug Kaletra (lopinavir/ritonavir).

At the time Leiden’s ascendancy was revealed, Emmens hailed his successor as bringing the right balance of scientific and business expertise to the CEO’s office at a time when Vertex is transitioning into a diversified commercial company. Incivek got off to a very strong start, posting sales of $494 million during its first two quarters on the market, and is expected to become a blockbuster in 2012. Still, Vertex is expected to announce stagnating sales progress for the protease inhibitor on Feb. 1, meaning Kalydeco and the chance to branch out into different therapeutic areas is a crucial factor in the firm’s growth prospects.

Vertex filed its NDA for Kalydeco, the first disease-modifying drug for CF, on Oct. 19 and received a priority review Also see "Vertex's Cystic Fibrosis Drug Kalydeco Could See Speedy Review" - Pink Sheet, 19 October, 2011.. But the drug’s actual approval came in just over three months’ time, a pace exceeded in recent years only by the 2.4 months needed to approve Novartis AG’s leukemia drug Gleevec (imatinib) in 2001 and the 2.6 months required to okay Sanofi’s hormone-resistant prostate cancer drug Jevtana (cabazitaxel) in 2010. Though FDA has in the past year shown great willingness to beat the user fee clock, particularly for personalized medicines, it usually occurs with oncology drugs.

Ultra-Orphan Drug Will Carry WAC Of $294,000 A Year

During the investor call, Wysenski said Kalydeco initially will carry a wholesale acquisition price of $294,000 a year. The high cost will be offset for some patients with a patient assistance program that will offer free medicine to uninsured CF patients with annual household incomes of $150,000 or less and a co-payment assistance program for patients with commercial insurance.

Though it settled on an ultra-orphan price that puts it in the top eschalon of drug costs, Wysenski said the company spoke with patients, doctors and payers to determine the appropriate price for the drug.

“We carefully considered many factors, including how well the medicine works, the number of people who would be eligible for treatment and our commitment to continue researching and testing new potential therapies, so we can help more people with CF and other diseases in the future,” she explained.

The company is currently running a Phase III trial in juvenile patients with the G551D mutation and also patients with the R117H mutation or other “gating” mutations not previously studied in Vertex’s Phase III program. Success in the latter trial could roughly double the U.S. population eligible to take Kalydeco from about 1,200 to 2,400 people, which Leiden noted still would leave the drug in the ultra-orphan category.

Asked whether the product’s pricing consideration took into account the potential for a broader indication or possible use in tandem with other CF drugs Vertex is developing, Wysenski said no. “We price [our] drugs for the label that the FDA gives us,” she said. “That does not take into consideration any future indications or combinations. … It is really priced for the value that it will deliver to this very small patient population.”

Beyond Kalydeco, a CFTR potentiator, Vertex’s pipeline includes two other clinical candidates for CF: VX-809 and VX-661, both CFTR correctors. The company is enrolling a Phase II trial testing Kalydeco and ‘809 in combination regimens in patients with the most common CF mutation, called F508del. If this combination shows efficacy, it could expand Vertex’s penetration to roughly 80% of CF patients. Vertex also will begin a Phase II trial for ‘661 monotherapy this quarter.

The G551D mutation is said to be the most common gating defect in CF patients, one in which CFTR proteins are present at the cell surface but do not function properly. By contrast, the F508del mutation is called a trafficking defect, causing proteins to have trouble reaching the cell surface.

Kalydeco, backed by data from the Phase III STRIVE and ENVISION trials, is designed to keep the CFTR channels at the cell surface open longer to improve the transport of chloride ions across the cell membrane in patients with gating mutations. In STRIVE, the drug yielded a mean absolute improvement in lung function for adult patients of 10.6% over 24 weeks and 10.5% over 48 weeks. In ENVISION, which tested the drug in patients between 6 and 12 years old, the drug produced a mean absolute improvement from baseline in lung function of 12.5% at 24 weeks. This improvement was maintained over 48 weeks of therapy.

Kalydeco also offers a strong safety profile – in pooled data from the pivotal trials, fewer patients in treatment arms (2%) exited the studies due to adverse events than in the placebo arms (5%), Vertex noted. The company currently is investigating Kalydeco in a Phase III, open-label, 96-week extension study (PERSIST) to track long-term safety and duration of treatment effect.

Labeling includes only a warning against use with CYP3A inhibitors and advises that patients should be monitored for elevated transaminase levels every three months during the first year of treatment.

Vertex said it would begin shipping the drug this week to pharmacies, to be provided in 30-day supply packs. The label advises patients to take one 150 mg tablet twice daily with fat-containing food, in tandem with any existing CF therapy they are prescribed.

Small Commercial Team, Plan To Focus On Specialty Pharmacies

Wysenski said Vertex has about 50 staff focused solely on Kalydeco – this will include a commercial team of 14 therapeutic specialists who will detail the product to clinicians and seven case managers who will provide one-on-one assistance to patients. Because most U.S. CF patients are treated within a system of 110 accredited care centers, Vertex will distribute Kalydeco mainly through a limited network of specialty pharmacies.

ISI Group analyst Mark Schoenebaum estimates peak worldwide sales of $583 million a year for Kalydeco, based only on administration to patients with the G551D mutation and approval in Europe. The drug was filed with the European Medicines Agency last fall and Vertex anticipates an approval during the third quarter.

Schoenebaum’s model assumes 80% market penetration for G551D mutation patients in both the U.S. and Europe, which would work out to Vertex treating 960 of about 1,200 such patients in the U.S. and 1,280 of about 1,600 such patients in the EU.

In a Jan. 31 note, analyst Matthew Roden projected $72 million in U.S. sales of Kalydeco this year, along with $20 million in Europe. For 2013, he predicts worldwide sales of $463 million.

Several variables will affect Kalydeco’s actual sales and earnings performance. Wysenski noted that in the U.S., about 60% of CF patients are on commercial insurance, while the remainder are covered by Medicare, Medicaid or other government insurance, which mandates discounted pricing. In addition, prices are negotiated country by country in Europe, making EU revenues difficult to project early on.

Kalydeco, ‘809 and ‘661 all were developed with assistance from the Cystic Fibrosis Foundation, which will receive a royalty on Kalydeco sales. Leiden said the royalty is tiered, topping out just below 10%.

Vertex Gets Quick FDA Approval Of Kalydeco; Prices New CF Drug At $294,000 Per Year

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