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VRTX: General Info:
Stock Report | April 4, 2009 | NNM Symbol: VRTX | VRTX is in the S&P MidCap 400

Vertex Pharmaceuticals Inc

S&P Recommendation BUY

Price 12-Mo. Target Price $39

Analysis prepared by Steven Silver on March 05, 2009, when the stock traded at $ 27.68.
Highlights
ä We expect 2009 revenues of $150 million, from
collaborators and anticipated business development
proceeds. We project 2010 revenues of
$165 million. We project a 2011 telaprevir
launch for treatment-naive and non-responder/
relapsed Hepatitis-C patients, although
we see potential for VRTX to file for accelerated
FDA approval for the latter patient group,
based on final Phase II PROVE 3 study data, expected
in 2009.
ä We see VRTX incurring significant R&D costs
over the next few years, as it advances registration
studies for both telaprevir and VX-770
programs. Though we view telaprevir as the
key value driver, we are encouraged by VRTX's
emerging pipeline programs in Hepatitis-C and
cystic fibrosis. We expect VRTX to seek partnerships
for earlier-stage programs to ease development
cost burdens.
ä We estimate 2009 and 2010 net losses of $3.12
and $2.83 per share, respectively. We see
VRTX, with more than $1 billion in cash estimated
following the March 2009 planned acquisition
of ViroChem Pharma for $100 million in
cash (in addition to 10 million shares), with sufficient
funds to bring telaprevir to market.
Investment Rationale/Risk
ä In our view, telaprevir is likely to emerge as a
leader in treating Hepatitis-C, which afflicts
more than 3 million U.S. people. Phase III study
is fully enrolled, under approved protocols to
show superiority in a 24-week treatment regimen
over current 48-week treatment standards
of care, with final data expected by mid-2010.
We believe the drug has shown superior efficacy
to rivals and that treatment duration and
benefits to treatment-failure patients represent
key possible competitive advantages. We also
see potential for twice daily dosing, versus the
current three-dose regimen, after early data,
and for long-term market share gains from
planned combination therapy studies with
telaprevir.

May 30 call: VQREF: 1.05 / 1.15. Problem = not liquid today