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Vertex CEO Uses Morgan Stanley Stage To Needle

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pcrutch   Tuesday, 09/13/11 06:32:05 PM
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Vertex CEO Uses Morgan Stanley Stage To Needle Firm's Analyst

The head of Vertex Pharmaceuticals Inc. (VRTX) used an appearance Tuesday at an investment-bank conference--normally a staid, cordial affair--to take to task one of his company's biggest critics, who also happens to work for the host bank.

Vertex Chief Executive Matthew Emmens told Morgan Stanley (MS) analyst David Friedman that he didn't think Friedman understood the drug maker in an exchange in front of a room full of investors at the investment bank's Global Healthcare Conference in New York.

Friedman rates Vertex shares "underweight," according to a Morgan Stanley website. He has been skeptical about whether Vertex's new hepatitis C drug, Incivek, will meet high sales expectations from others on Wall Street.

But Vertex shares are up more than 40% year-to-date, trading recently at $50.21, buoyed by early signs that Incivek has been a brisk seller and is outperforming a competing new drug from Merck & Co. (MRK), Victrelis.

At the conference, where Friedman introduced health-care executives and asked them questions, Emmens said Incivek's launch has been successful, and Vertex plans to file for regulatory approval of a cystic-fibrosis drug soon.

"I think we've done a little better than you thought we would," Emmens said to Friedman.

"I absolutely agree," Friedman responded. But Emmens, a drug-industry veteran who previously worked at Shire PLC (SHPGY) and Merck, was just getting started.

"Do you understand this company? I don't think so," Emmens said in remarks played over the Internet. "By what I read, I don't think you understand our company. I'm going to do the best I can to prove you wrong again and again, because it's been fun. But when does it stop, you know?"

Friedman said he is "trying to do the work that we see." To which Emmens replied: "OK. You do your job, we'll do ours. Keep it up."

Emmens didn't raise his voice, and even sounded jovial at times, but his words didn't leave much doubt about his view of Friedman's research. Friedman quickly moved on to questions about Vertex's business.

At the end of the presentation, Friedman thanked Emmens for appearing, and the chief executive reciprocated.

Vertex's road to Incivek's launch was a long one, coming 15 years after the company made a splash by publishing key research on an element of the hepatitis C virus that became the target for Incivek. The company's past drug-research efforts also were the subject of a 1995 book titled "The Billion Dollar Molecule: One Company's Quest for the Perfect Drug."

Morgan Stanley has gotten banking business from Vertex in the past, including co-managing a 2009 stock offering.

Friedman couldn't be reached. A Morgan Stanley spokeswoman declined to comment.

-By Peter Loftus, Dow Jones Newswires; 215-982-5581; peter.loftus@dowjones.com

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