Vertex (VRTX) just got an early approval for their new Cystic Fibrosis drug. Key points:
- only 1200 patient target population
- $294K per patient
- $350M peak annual US sales, which should add $2B to market cap, not counting EU
- Leads to more favorable chances of same drug being approved for combo therapies later this year
That $294K price can be justified by the targeted aspect. Unlike DNDN's Provenge at $93K and a 33% chance of "working", this high flyer will only be prescribed to a very specific group of CF sufferers with a particular genetic match. After the uproar about Provenge, this is welcome news.
VRTX is heavily shorted and already debatably undervalued based on 2012 sales of its Hep C drug, which should easily surpass $2B. Doubts exist about its shelf life past 2014 due to competition, but doubts exist for every drug in the FDA approval pipeline. The company should have a takeover value of $10B on Hep C alone.
Analysts have come out with targets over $55 this past week prior to the CF drug approval. VRTX is a good buy under $50, and there's that spectre of buyouts and short squeezes putting further upward pressure on it.
(Note: I am long VRTX common stock)
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