(Updates with closing share price in seventh paragraph.)
June 24 (Bloomberg) -- A combination of two Vertex Pharmaceuticals Inc. drugs improved lung function in patients with the most common form of cystic fibrosis, holding out the promise of a new treatment for the genetic illness. The company’s shares rose to their highest price in almost 14 years.
Vertex will seek regulatory approval in the fourth quarter for the treatment in the U.S. and the European Union based on the final-stage trials, dubbed TRAFFIC and TRANSPORT, the Boston-based company said in a statement today.
“Today’s results are a milestone for CF patients and their families, as well as for our company,” Vertex Chief Executive Officer Jeffrey Leiden said on a conference call. The goal is to treat as many people as possible, and he said the results provide “optimism that we can make new therapies possible for more patients.”
The combination of lumacaftor and Kalydeco, or ivacaftor, is the first treatment for the underlying cause of cystic fibrosis in patients with two copies of a genetic mutation known as F508del, the company said. Those patients total about half of those with the illness, and include more than 22,000 people ages 12 and over in North America, Europe and Australia.
“These data showed consistent evidence of clinical benefit in lung function and other measures of the disease,” Bonnie Ramsey, a professor of pediatrics at the University of Washington, said in the statement.
While the drug will be able to treat patients 12 and older, the company will also start testing on patients between ages 6 and 11, Leiden said.
Vertex rose 40 percent to $93.53 at the close in New York, the biggest single-day gain since April 2013 and the highest price since November 2000. The jump increased the company’s market value to about $22.1 billion.
In the studies, which included 1,108 patients, those taking the drug saw lung function improve by 2.6 percent to 4 percent compared to those taking a placebo, Vertex said.
Mark Schoenebaum, an analyst with International Strategy & Investment Group LLC in New York, said the drugs could boost Vertex’s total sales to $5.5 billion by 2020.
“The data are good and will clearly support worldwide regulatory approval for this drug regimen,” he said. “I can’t see any reason why the vast majority of patients with the appropriate mutation will not want to take this regimen.”
The stock may go to $100, Schoenebaum said, with annual earnings per share in 2020 reaching $8.70. Vertex posted a loss last year. Kalydeco is already on the market, and had sales of $371 million for Vertex last year.
Cystic fibrosis is a deadly genetic disease that affects about 70,000 people around the world. In patients, a thick mucus clogs the lungs, hurting breathing. It also impedes the pancreas from making enzymes that help get nutrients to the body, according to the Cystic Fibrosis Foundation. Most patients don’t live into their 30s, according to Vertex.
Vertex executives declined to comment on the call on what the price of the treatment will be, and said they will consider patient population size and how big the clinical benefit is.
“Many people with CF and their families have been eagerly awaiting these results, and we are thrilled with the outcome,” Robert Beall, chief executive officer of the Cystic Fibrosis Foundation, said in an e-mail. “These studies further validate that we are on the right track to getting new and effective treatment into the hands of people with CF who so desperately need them.”
Geoffrey Porges, an analyst with Sanford C Bernstein & Co. in New York, questioned the new data, citing “limited effect” and missed secondary endpoints. He continues to rate the stock as an equivalent of buy, with a price target of $65.
“We prefer to remain on the sidelines for what is increasingly a single product story with still substantial market cap and investor interest,” he said in a note to clients.
--With assistance from Marie French in New York and Catherine Larkin in Chicago.