Why is Vertex Selling Off Now?

Vertex Pharmaceuticals Inc. (NASDAQ:VRTX) backtracked on data it released earlier this month relating to the beneficial effects of its drugs on patients suffering from cystic fibrosis.

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Cystic fibrosis is a condition that causes the thin layer of mucus that helps keep the lungs free of germs to thicken, and thereby clog airways, leading to infections. On May 7, Vertex had claimed that in a study, 46 percent of patients experienced an improvement in lung function of 5 percent or more using its medication. This figure was revised downwards Tuesday to 35 percent.

Furthermore, the study had claimed that about 30 percent of patients saw an improvement of at least 10 percent – this was adjusted down to 19 percent of patients. The company also reported patient performance on placebo that was much worse than analysts expected. The study, in phase 2, involves a combination of Kalydeco, the company’s new cystic fibrosis drug, with VX-809, an experimental drug.

“The corrected data appear weaker than the original data,” ISI Group analyst Mark Schoenebaum said. On the placebo figures he said, “This faster-than-expected rate of placebo decline may make the data less reproducible in a phase 3 setting.”

Vertex explained that the variation in results was due to a misinterpretation of data from a vendor involved in the statistical analysis. Its shares fell more than 20 percent in pre-market trading on Tuesday.

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