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Vertex Pharmaceuticals Inc VRTX

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Reiterating $259 FVE for Narrow-Moat Vertex After Phase 2 Clinical Trial Failure in AATD

Anna Baran Equity Analyst

Analyst Note

| Anna Baran |

We are maintaining our fair value estimate of $259 per share for narrow-moat Vertex following the news that the company is discontinuing development of VX-814 for the treatment of alpha-1 antitrypsin deficiency after elevated liver enzymes were observed in several patients. We think the market was pricing in undue success for the asset, which was in a phase 2 study, and Oct. 15’s 20% drop in share price is overcorrection in the market’s expectations for Vertex’s pipeline. We’ve revised our estimates for Vertex’s potential in AATD by removing VX-814 from our model. VX-864, another corrector molecule in development, is in an ongoing phase 2 proof-of-concept study, and while we assign the asset a low probability of success given its early stage, investors should note that the company still has at least one more shot for the rare indication.

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Company Profile

Business Description

Vertex Pharmaceuticals discovers and develops small-molecule drugs for the treatment of serious diseases. Its key drugs are Kalydeco, Orkambi, Symdeko, and Trikafta for cystic fibrosis, where Vertex therapies remain the standard of care globally. Vertex's pipeline also includes therapies for cancer, pain, inflammatory diseases, influenza, and other rare diseases.

50 Northern Avenue
Boston, MA, 02210
T +1 617 341-6100
Sector Healthcare
Industry Biotechnology
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 3,000