Replies to post #71415 on Biotech Values

[DewDiligence]

Given the mountains of cash VRTX has burned and will continue to burn for a few more years, if Telaprevir does not make it to market for some bizarre reason, VRTX will surely be considered the biggest flop in biotech history.

p.s. Feuerstein actually comes across as a nice guy on the phone, but you’d never know it from his writings where he shows an impressive knack for being an ass.

[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