Biotech Values

[DewDiligence]

Re: VRTX’s colossal cash burn

I think the more appropriate thing when mentioning Vertex's burn is to point out the remarkable thing, which was discussed here on a thread a while back namely how they already are one of the biggest (if not the biggest) burners of cash in biotech ever and they still have a couple years before telaprevir gets to market, much less gets them to profitability!

Let’s run the numbers again and update them for VRTX’s latest financial guidance.

As of 9/30/08, VRTX’s cumulative losses since inception were $1,905,273,000. The guidance given this week for $460M in GAAP losses for 2008 implies that VRTX lost $142M in 4Q08, bringing the cumulative losses since inception to $2.047B as of 12/31/08.

VRTX guides investors to expect $475-510M of GAAP losses for 2009; for the sake of discussion, let’s take the midpoint of this range, which is $492.5M. Adding this to the $2.047B of cumulative losses at 12/31/08 yields expected cumulative losses of $2.54B as of 12/31/09.

In other words, if VRTX is not acquired during 2009, it will (according to its own guidance) surpass Millennium’s record of $2.48B and become the biggest biotech cash burner of all time!

Links to financial statements and guidance:
http://sec.gov/Archives/edgar/data/875320/000104746908011653/a2188805z10-q.htm#fc77501_vertex_pharmaceuticals_incorpo__ver05206
http://sec.gov/Archives/edgar/data/875320/000104746908011653/a2188805z10-q.htm#fe77501_vertex_pharmaceuticals_incorpo__ver05312
http://finance.yahoo.com/news/Vertex-Outlines-2009-Business-bw-14027760.html
http://sec.gov/Archives/edgar/data/1002637/000110465908032483/a08-11767_110q.htm#CondensedConsolidatedBalanceSheet_135126