Biotech Values

[Preciouslife1]

A Rash or Non~rash decision??

Bullish views on Vertex ahead of liver meeting
Reuters Health - Apr. 10, 2007 By Bill Berkrot -- Analysis
http://www.therapeuticsdaily.com/news/article.cfm?contenttype=sentryarticle&contentvalue=1309277....

NEW YORK (Reuters) - Vertex Pharmaceuticals Inc. will present data on its closely watched experimental hepatitis C treatment this week and many analysts are saying this is a good time to buy the company's beaten down shares despite the risk that the data could disappoint.

Investors appear to be listening, as Vertex shares have recovered about 14 percent in recent days ahead of the European liver disease meeting in Barcelona at which the data will be unveiled on Saturday.

The shares had shed about a third of their value from late November through March as enthusiasm for the drug, VX-950 or telaprevir, was tempered by safety concerns.

The shares broke back through the $30 barrier late last week and climbed another 2 percent Tuesday to $32.16 after trading at around $45 back in November.

Sanford Bernstein analyst Geoffrey Porges thinks the data coming out of the meeting will calm investor nerves substantially and is encouraging clients to buy Vertex shares.

"I believe that we'll come away from this meeting believing that VX-950 is still the leading and most likely candidate to transform the treatment of hepatitis C virus," Porges said.

"We'll see a lot of preclinical data about other compounds and other combinations of compounds (at the meeting) but I don't think we'll see anything that is anywhere near where Vertex is in terms of having significant clinical data," added Porges, who has a price target of $52 on Vertex shares.???

Merrill Lynch analyst Hari Sambasivam wrote in a research note last month: "While we cannot rule out further declines, current levels represent an opportunity for patient investors."

VX-950 is being tested in combination with two medicines considered to be the gold standard of treatment -- a long-acting interferon and the antiviral drug ribavirin.

Analysts, investors and liver specialists will pore over the mid-stage clinical trial data with particular interest in the sustained virologic response (SVR) of the drug -- the percentage of patients in whom the virus stayed below detectable levels -- and the number of patients who dropped out due to adverse side effects.

DROPOUT RATE

Concern over the dropout rate seen in previous data put considerable pressure on the shares and raised tolerability concerns, although much of the dropout seen earlier was due to a rash rather than more serious side effects.

"We view the home run scenario of 75 percent SVR rate for telaprevir for only 12 weeks of therapy as possible but a long shot," Piper Jaffray analyst Rachel McMinn wrote in a research note. "We view an SVR rate in the 40 percent to 50 percent range as more probable."

Cowen and Co. analyst Phil Nadeau said investors are likely looking for at least a 40 percent sustained response. "If you see over 40 to 50 percent, people will be happy; less than 40 and people will be somewhat disappointed," he said.

"If it's very potent, people might be more tolerant on the side effects," Nadeau noted. "If it's thought to be less potent, the side effects become more important."

Much of the focus before the meeting appears to be on three-month follow-up data from a small subset of about 20 patients who had treatment stopped after just 12 weeks in an effort to glean further efficacy and tolerability clues, several analysts said.

However, Bernstein's Porges believes that group to be far too small to draw meaningful conclusions. He instead will be looking at the full complement of 175 patients that had started taking the medicine during the phase IIb trial.

"When you've got nearly 200 patients treated, and probably you'll see no more than 5 to 10 incidents of side effects including rash, I think that will calm peoples' fears and anxieties a lot," Porges predicted.

Options and equities analysts are expecting near-term volatility, but most are predicting a long-term winner with sales of the drug eventually exceeding $1 billion a year.

Cowen's Nadeau, who is forecasting global sales for the drug of $1.5 billion by as early as 2010, agreed that near-term volatility is likely, but he remains bullish on Vertex.

"This drug is a front runner in the hepatitis C space," Nadeau said, "and no matter what happens over the weekend there's still many other ways this can become a very large, very successful product."

Personal Comment: I think that they are downplaying the severity of the rash and side effects and that VX-950 being a protease inhibitor, and the (SVR) viral rebound data not fully disclosed as of yet, then this is one agressive call, with a target of $52 based on ??????......Dr Boger have any friends over there????
VX-950 will have to be part of a combo HCV regimen as it is a protease inhibitor which inhibits but does not destroy the virus and especially an enveloped virus.
There will be swings in the VRTX shares according to data and sentiment, but a $52 target is agressive imho and would value VRTX at over $6 Billion...

Share Statistics
Average Volume (3 month)3: 1,769,010
Average Volume (10 day)3: 2,069,800
Shares Outstanding: 126.65M
Float: 118.27M
% Held by Insiders4: 0.89%
% Held by Institutions4: 91.50%
Shares Short (as of 12-Mar-07)3: 10.45M
Short Ratio (as of 12-Mar-07)3: 6.2
Short % of Float (as of 12-Mar-07)3: 8.30%
Shares Short (prior month)3: 8.96M

VALUATION MEASURES

Market Cap (intraday): 4.07B
Enterprise Value (11-Apr-07)3: 3.41B
Price/Sales (ttm): 18.47
Price/Book (mrq): 7.87
Enterprise Value/Revenue (ttm)3: 15.78
Enterprise Value/EBITDA (ttm)3: -21.288

Profitability
Profit Margin (ttm): -95.63%
Operating Margin (ttm): -104.17%

Management Effectiveness
Return on Assets (ttm): -15.83%
Return on Equity (ttm): -55.81%

Income Statement
Revenue (ttm): 216.36M
Revenue Per Share (ttm): 1.911
Qtrly Revenue Growth (yoy): 47.80%
Gross Profit (ttm): 204.19M
EBITDA (ttm): -160.38M
Net Income Avl to Common (ttm): -207.94M
Diluted EPS (ttm): -1.83
Qtrly Earnings Growth (yoy): N/A


Balance Sheet
Total Cash (mrq): 704.63M
Total Cash Per Share (mrq): 5.564
Total Debt (mrq): 121.75M
Total Debt/Equity (mrq): 0.241
Current Ratio (mrq): 3.073
Book Value Per Share (mrq): 4.011


Cash Flow Statement
Operating Cash Flow (ttm): -22.48M
Levered Free Cash Flow (ttm): -121.79M