UPDATE 2-Vertex hep C drug cures toughest patients in study

* 65 pct telaprevir cure rate seen in Realize study

* Standard drugs cured 17 pct in trial

* 31 pct null responders cured by telaprevir vs 5 pct

* Safety, tolerability consistent with prior studies

* Shares rise 1 percent (Adds analyst comment, share move)

By Bill Berkrot

NEW YORK, Sept 7 (Reuters) - Vertex Pharmaceuticals' (VRTX.O) high-profile experimental hepatitis C drug telaprevir cured 65 percent of patients who had previously failed to be cured by standard drugs, according to data from a pivotal late-stage clinical trial.

The 65 percent sustained viral response, or SVR, which is considered tantamount to a cure, compared with a SVR rate of just 17 percent for patients who received pegylated interferon and ribavirin without telaprevir.

Vertex shares rose 1 percent in extended trading.

"This is a real breakthrough," said Sanford Bernstein analyst Geoffrey Porges.

"To see them deliver a three times to six times improvement in the cure rate across all previously treated patient groups is really impressive," Porges said.

There was a 31 percent telaprevir cure rate among null responders, or those who had almost no response to prior treatment, considered to be the most difficult to treat patient population of all. The standard drugs cured only 5 percent of those patients in the study.

Some analysts, including Brian Skorney of ThinkEquity, were concerned that U.S. regulators might balk at approving telaprevir for null responders based on the 31 percent result, which was lower than what had been seen in earlier, much smaller studies, or that doctors might decline to treat those patients with telaprevir with 69 percent not responding.

But Porges disagrees on both counts.

"There's been no shortage of physicians willing to treat patients based on a 35 percent SVR rate in treatment naive patients," Porges said. "The FDA is going to be ecstatic about this."

The results released on Tuesday were from the third Phase III study of telaprevir and complete the pivotal data that Vertex will submit to health regulators by year end as it seeks approval of the closely watched medicine, which is expected to be on the market next year.

Telaprevir is widely expected to become a game changer in the treatment of the serious liver disease, and some analysts believe it could eventually garner annual sales of more than $4 billion.

The lofty expectations are based on telaprevir's ability to cure a far higher percentage of patients than the notoriously tough to tolerate standard drugs, and its potential to cut the current 48-week treatment duration in half when used in combination with interferon and ribavirin.

Analysts and physicians believe many hepatitis C patients have been delaying treatment until new drugs like telaprevir are approved due to the disappointing cure rate of current treatment as well as debilitating flu-like symptoms that lead many patients to discontinue taking their medication.

The first Phase III study of telaprevir in previously untreated hepatitis C patients led to a 75 percent cure rate compared with 44 percent for patients who received interferon and ribavirin.

A second Phase III trial showed that the overwhelming majority of previously untreated patients who respond early to telaprevir in the treatment regimen can be cured in half the time of current therapy.

The latest trial, dubbed Realize, tackled a much tougher patient population -- those who already failed to be cured by prior treatment -- and was considered the biggest challenge yet for telaprevir.

"The Realize data represent a major milestone in the development of new treatments for hepatitis C, as patients who received telaprevir-based therapy had a viral cure rate almost four times greater than the cure rate in those treated with available medicines," Dr Stefan Zeuzem, the study's lead researcher, said in a statement.

"These results may provide hope to people who have not been cured and who are in need of new treatment options, including those with advanced liver disease," Zeuzem added.

In addition to null responders, subjects in the study included patients who had relapsed after prior treatment and those who achieved a partial response to current medicines but were not cured.

Among relapsers, the telaprevir-based regimen led to an 86 percent cure rate compared with 24 percent from standard drugs. There was a 57 percent telaprevir cure rate among the partial responders versus 15 percent in the control group.

In an analysis of the data, with the null responders excluded, telaprevir had a cure rate of 78 percent versus 21 percent for standard medicines, the company said.

Telaprevir, from a new class of hepatitis C treatments, is an antiviral drug that is expected to compete with a similar medicine being developed by Merck & Co (MRK.N) called boceprevir. But analysts have been virtually unanimous in their belief that telaprevir is the superior medicine.

In Merck's study of treatment failure patients that did not include null responders, boceprevir led to a 66 percent cure rate. Boceprevir also cured 66 percent of previously untreated patients in a separate Merck trial.

"The majority of the trial went according to where people to were looking for it to wind up being, maybe a little better than they were expecting among the relapsers and partial responders pooled analysis," Skorney said. "It definitely shows an advantage numerically over boceprevir."

Safety and tolerability in the latest telaprevir study was consistent with what had been observed in previous studies, with the most common side effects mild to moderate incidence of skin rash, fatigue, nausea and anemia, the company said.

Adverse events that led to discontinuation from the study occurred in 4 percent of telaprevir patients and 3 percent in the control arm.

Vertex shares rose to $35.35 in extended trading from their Nasdaq close at $35.01. (Reporting by Bill Berkrot, editing by Matthew Lewis)