Vertex Pharmaceuticals-Johnson & Johnson Collaborate on Flu Drug - Analyst Blog

Vertex Pharmaceuticals Inc. VRTX has joined forces with Johnson & Johnson JNJ for the worldwide development and commercialization of VX-787. The candidate is being developed for the treatment of influenza.  

The Deal

Vertex Pharma will be receiving an upfront payment of $30 million from Johnson & Johnson as per the deal. Johnson & Johnson will enjoy full global development and commercialization rights to VX-787. Vertex Pharma is also eligible to receive development and commercial milestone payments along with royalties on future product sales. The deal is however subject to the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

VX-787

Last year, Vertex Pharma successfully completed a phase IIa study on VX-787. Results revealed a statistically significant reduction in the amount of virus in nasal secretions after treatment with VX-787 in patients suffering from influenza. Data showed statistically significant improvements in viral and clinical measurements of influenza infection. VX-787 was also generally well tolerated during the study.

Our Take

Vertex Pharma's alliance with a company like Johnson & Johnson is encouraging. As per the Centers for Disease Control and Prevention, each year around 5% to 20% of the U.S. population are infected by influenza. At present, companies like GlaxoSmithKline GSK have a strong presence in the influenza market.

Meanwhile, we expect investor focus to remain on the data read-out from the phase III TRAFFIC and TRANSPORT studies expected shortly. The studies are evaluating fixed-dose combinations of VX-809 and Kalydeco in patients suffering from cystic fibrosis CF who have two copies (homozygous) of the F508del mutation in the CFTR gene. Vertex plans to submit marketing applications in the U.S. and EU in the second half of the year. Earlier this week, Vertex Pharma's shares crumbled after The Street reported that a Bernstein analyst, Geoff Porges is of the opinion that the studies are more likely to fail.

Vertex Pharma carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the biotech sector include Gilead Sciences Inc. GILD. Gilead is a Zacks Rank #1 (Strong Buy) stock.

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