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Vertex Pharmaceuticals Inc VRTX

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Vertex Tumbles After Shelving VX-864; Minimal Impact on Our $259 FVE, Shares Undervalued

Rachel Elfman Equity Analyst

Analyst Note

| Rachel Elfman |

Vertex announced it is shelving VX-864, an experimental drug for Alpha-1 Antitrypsin Deficiency, after disclosing that the magnitude of treatment effect observed in its phase 2 study is unlikely to translate into substantial clinical benefit. However, this development has minimal impact on our fair value estimate because we had accounted for only 10% probability of the drug being approved in our valuation model. We maintain our $259 fair value estimate and narrow moat. Shares dropped over 10% as investors reacted negatively to the announcement. However, the decline in Vertex's share price presents an opportunity for long-term investors as we view shares as undervalued, currently trading in 4-star territory.

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Company Profile

Business Description

Vertex Pharmaceuticals is a global biotechnology company that 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. In addition to its focus on cystic fibrosis, Vertex’s pipeline includes gene-editing therapies such as CTX001 for beta-thalassemia and sickle-cell disease as well as small-molecule medicines targeting diseases associated with alpha-1 antitrypsin deficiency and APOL1-mediated kidney disease. Vertex also has an expanding research pipeline focused on inflammatory diseases, non-opioid treatments for pain, and genetic and cell therapies for type 1 diabetes and rare diseases.

Contact
50 Northern Avenue
Boston, MA, 02210
T +1 617 341-6100
Sector Healthcare
Industry Biotechnology
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Aggressive Growth
Employees 3,400

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