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Why We're Still Bullish on Vertex Despite Low Guidance

The market is underestimating Vertex's entrenched position in the cystic fibrosis market supported by a robust pipeline of next-generation products.

We are lowering our fair value estimate for

Orkambi headwinds are expected to weigh on the company’s near-term growth. However, we believe the successful launch of next-generation corrector tezacaftor (VX-661) in combination with potentiator drug Kalydeco would boost penetration into the patient population with two F508del mutations and provide an opportunity to serve patients with one F508del mutation and residual CFTR protein functionality in 2018. The company expects to submit an NDA in the second half of the year if phase III trials meet their endpoints (data expected 1H 2017). The tezacaftor combination is not expected to produce the bronchoconstriction seen in Orkambi, which is encouraging and could translate into lower discontinuation rates and higher uptake in the cystic fibrosis market.

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About the Author

Kelsey Tsai

Equity Analyst

Kelsey Tsai is an equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers biotechnology companies. Before assuming her current role in 2016, Tsai was an associate equity analyst, supporting Morningstar’s coverage of the healthcare sector. She joined Morningstar in 2013 as a data analyst and specialized in exchange-traded funds and variable annuities.

Tsai holds a bachelor’s degree in economics from Georgetown University. She also holds the Chartered Financial Analyst® designation.

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