UPDATE 4-Vertex cystic fibrosis data disappoints some

* Midstage trial of drug combination hits goals

* Effectiveness falls short of 'dramatic' response-analyst

* Shares fall 9.6 percent (Adds trial detail, analyst comment, updates shares)

By Lewis Krauskopf

NEW YORK, June 9 (Reuters) - An experimental cystic fibrosis treatment from Vertex Pharmaceuticals Inc (VRTX.O) failed to show a dramatic improvement in patients, sending shares of company down more than 9 percent.

The combination of two drugs met the main goals of the small midstage trial, but some on Wall Street had higher hopes for the effect.

Optimism over the cystic fibrosis medicines have helped drive up Vertex shares by more than 60 percent since December after one of the drugs in the combination, VX-770, showed significantly improved lung function earlier this year in a subset of patients.

Cystic fibrosis is an inherited disease that impairs the lungs and digestive system.

"While the data are a step in the right direction, the synergy is very modest and the data are by no means a 'game changer' like the VX-770 data," JPMorgan analyst Geoff Meacham said in a research note. "Many on the Street were hoping for dramatic data."

The data also cast some doubt on expectations that Vertex could soon have a second product with blockbuster potential after it started selling its first product, the hepatitis C drug Incivek, last month.

"We expect the CF program to continue to play a more limited role in the stock," Needham & Co analyst Alan Carr said in a research note, adding that Incivek will be the "primary driver."

Cystic fibrosis affects about 30,000 people in the United States, according to the Cystic Fibrosis Foundation.

It is a genetic defect in which the lungs are unable to effectively remove salt -- making patients prey to thick fluid build-up in the lungs that can cause dangerous infections.

VX-770 alone is meant for people with a gene mutation that represents about 4 percent of cystic fibrosis patients. The combination of VX-770 with another drug, VX-809, is designed to address people with the F508del mutation, which is present in nearly 90 percent of patients, according to Vertex.

Vertex said the combination met the two main goals of the first part of the 62-patient Phase II study: safety and tolerability; and showing effect on a protein called CFTR involved in causing the disease.

The effect on CFTR was measured by sweat chloride, or the salt content of a person's sweat.

The combination showed a reduction in sweat chloride of 13.17 millimoles per liter, while some on Wall Street were expecting a decline closer to 20, Meacham said.

Despite the stock sell-off, the combination treatment is by no means dead in the water as a result of the small study. In one arm of the trial, four patients receiving the combination therapy had a sweat chloride reduction greater than 20 mmol/L

"Given the data, we think Vertex is very much in the game for the broad CF market with VX-809/VX-770 combination as well as another shot with another CFTR VX-661 that recently entered clinical testing," Leerink Swann analyst Howard Liang said in a research note.

Vertex said it would start the second part of the study, which will evaluate longer dosing periods, later this year.

RBC Capital Markets analyst Jason Kantor called the data "very encouraging," noting that "the effect of the high dose of VX-770 seems to add substantially to the treatment effect of 809."

The company plans to seek approval for VX-770 later this year.

Vertex shares were down $5.09, or 9.6 percent, at $48.05 in afternoon Nasdaq trading. (Reporting by Lewis Krauskopf, Ransdell Pierson and Bill Berkrot; Editing by Lisa Von Ahn, Derek Caney and Gunna Dickson)