Vertex Pharmaceuticals Will Outperform, Has 'Competitive Edge,' JMP Says

In a report published Monday, JMP Securities analyst Liisa A. Bayko maintained a Market Outperform rating on

, with a price target of $152, after news of the company boosting its CF pipeline with inhaled ENaC inhibitors. Vertex has obtained the global rights to Parion's epithelial sodium channel (ENaC) inhibitors, P-1037 and P-1055. Vertex would give Parion, a private pharma company, $80M upfront and $490M in future milestones, as well as low-double digit to mid-teen royalties on net sales. "We view this approach as complementary to VRTX's CFTR modulators and one that may work across all CF genotypes - ENaC channels are negatively regulated by CFTR and, thus, in CF patients, the ENaC channels are dysregulated (see our Robust Early Stage Cystic Fibrosis Pipeline note and page 2 of this note)…Adding Parion's ENaC inhibitors to the pipeline improves the competitive edge for Vertex Pharmaceuticals cystic fibrosis franchise," analyst Liisa Bayko said. "In vitro experiments demonstrated at least additive activity of the combined ENaC inhibitor and VRTX's CFTR modulators and a Phase 1 study of the ENaC inhibitor in healthy volunteers showed a benign safety profile of the inhaled formulation," the report added. Gilead Sciences, Inc.

has the rights for ENaC inhibitors for seven years, during which a small Phase 1b study was conducted for P-1037 in eight patients. Following this, Parion has initiated a Phase 2a monotherapy study of P-1037 in 120 CF patients for which data may be expected by end of this year or early next year. Vertex plans to "initiate a Phase 2a triple-combo study of its lumacaftor/ivacaftor plus ENaC in homozygous F508del patients in early 2016," Bayko commented, while adding, "We view this as a positive step forward for Vertex's CF franchise and we continue to recommend owning shares of this leading CF company ahead of the expected approval in early July for the lumacaftor/ivacaftor combo in F508del."