Vertex stock plummeted Thursday after the company's non-opioid pain drug proved it's no better than a placebo in patients with lower back and hip pain.
Over 12 weeks, Vertex Pharmaceuticals' suzetrigine led to a 2.02-point improvement on the numeric pain rating scale in patients with lumbosacral radiculopathy, also known as LSR or sciatica. This scale measures pain intensity on a 0 through 10 basis. Placebo patients reported a 1.98-point improvement in their pain intensity.
Vertex is still planning to move suzetrigine into Phase 3 testing in sciatica patients, noting the study wasn't properly set up to make a statistical comparison between suzetrigine and a placebo. Further, ad hoc analysis showed there was "variability in the placebo response across study sites, a recognized issue in pain trials," the company said.
RBC Capital Markets analyst Brian Abrahams called the results a "worst-case scenario" for this key drug. He has a sector perform rating on Vertex stock.
The results "raise considerable risk around suzetrigine's potential across multi-$B chronic pain indications," he said in a client note. "Given these data and high multiples which assumed pipeline successes that would drive growth, we expect meaningful stock downside on today's news."
On the stock market today, Vertex stock tumbled 11.4%, closing at 396.64. That suggests investors have completely discounted the non-opioid pain drug. Without it, Vertex would trade between 370 to 400, Abrahams said.
Vertex Moves Ahead In Chronic Pain
Overall, the study actually met Vertex's goal. At the beginning of the study, patients rated their pain at an average of 6.33 points on the 11-point scale. By the end of the study suzetrigine patients had a 2.02-point improvement in pain.
But the placebo results undoubtedly cloud Vertex's efforts. RBC Capital Markets analyst Brian Abrahams says LSR is a big chronic disease, accounting for about 40% of patients. He cut his price target on Vertex stock to 400 from 451.
"While management shared that the two-point change in within-group NPRS by suze should be viewed as clinically meaningful (especially in the context of broad PNP studies), we think investors are less convinced given today's resulting stock action," Piper Sandler analyst Christopher Raymond said in a report to clients. PNP refers to peripheral neuropathy pain.
Vertex is likely pushing ahead in sciatic pain in the hopes of snagging approval for suzetrigine as a treatment for broad neuropathic pain, William Blair analyst Myles Minter said in a report. Vertex is also studying suzetrigine in patients with diabetic neuropathy. But it will need both to succeed in late-stage testing to gain approval.
"We are unsure about the validity of moving into Phase III in LSR based on today's data and an effect size that appears very difficult to power a pivotal study for beyond potentially removing high placebo responder sites, which are nearly always present in pain trials," Minter said.
Still, he rates Vertex stock an outperform.
Setbacks For Non-Opioid Pain Drug
This isn't the first time Vertex has faced a setback for the non-opioid pain drug.
Earlier this year, suzetrigine proved it wasn't inferior to opioids for the treatment of acute pain due to an abdominoplasty, or tummy tuck. But it was inferior to opioids in patients who'd had a bunion removed. Still, Vertex stock climbed more than 2% on those results.
The Food and Drug Administration is scheduled in January to make a decision on whether to sign off on suzetrigine as an acute pain treatment. But chronic pain is, by far, the bigger market.
Vertex is currently running a Phase 3 study of suzetrigine in patients with diabetic neuropathy, or DPN. The Phase 2 study in these patients didn't use a placebo, but the improvement in pain on the same scale was similar to the sciatica patients, said Abrahams, the RBC analyst.
"We believe that today's data offers some hints as to the potential placebo response that could occur in the ph.III DPN study, setting a high bar for hitting (statistical significance) vs. a placebo comparator arm," he said.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
