Vertex jumps after ‘wowing’ analysts with cystic fibrosis data
Shares of Vertex (VRTX) are on the rise after the company reported positive data from Phase 1 and Phase 2 studies of three different triple combination regimens in people with cystic fibrosis who have one #F508del mutation and one minimal function mutation.
Reacting to the news, several Wall Street analysts upgraded the stock to buy-equivalent ratings and raised their price targets on the shares.
In a research note to investors this morning, Janney Capital analyst Debjit Chattopadhyay upgraded Vertex to Buy, stating that the Phase 2 data for its three triple combination programs in CF were “significantly above the most optimistic expectations.”
The analyst argued that the quality of the data should allow Vertex to potentially accelerate commercialization under the “New FDA” and importantly sets the bar very high for competition. Citing its “potential dominance of CF,” Chattopadhyay said he thinks Vertex becomes the “most logical large-cap M&A target.”
Chattopadhyay was not the only analyst upgrading the stock this morning.
His peer at Cowen also upgraded Vertex to Outperform, saying efficacy data from its triple regimens showed “breakthrough-quality” results, and will very likely “dramatically” improve the quality of life and extend the life span of 80% of the 75K patients with CF worldwide.
Phil Nadeau pointed out that he expects a launch in 2021 and $10B in franchise sales in 2025. The analyst raised his price target on the shares to $200 as he sees a 10-year path of revenue growth for Vertex.
Meanwhile, Barclays analyst Geoff Meacham told investors that he thought the Phase 2 data in CF was an “unequivocal success and constitutes a major de-risking event.” Citing more confidence in the viability of the triple combo and the likely accelerated development path, the analyst upgraded Vertex to Overweight and raised his price target on the stock to $180.
Also this morning, Raymond James analyst Laura Chico upgraded Vertex to Outperform, with a $181 price target, citing the “compelling” efficacy data for its triple-combo CF regimens.
WOW: JPMorgan analyst Cory Kasimov began his research note with “Wow. Just wow,” following last night’s data release from Vertex.
To say that the initial results for Vertex’s triple combinations beat expectations would be an understatement, Kasimov told investors, adding that the data not only sets up well to reach a large majority of the CF patient population, but also greatly increases the competitive hurdle while also enhancing the scarcity value of the company. He raised his price target on the shares to $175 and reiterated an Overweight rating on the name.
Credit Suisse, Stifel, Citi and Piper Jaffray also raised their price targets on the stock following the data release.
OTHERS TO WATCH
Competitor Galapagos (GLPG) is sliding in morning trading following Vertex’s CF data announcement.
However, commenting on the news, H.C. Wainwright analyst Andrew Fein said the data may also be “encouraging” in a roundabout way for Galapagos and another smaller company exploring an add-on to a CF doublet combo, Proteostasis (PTI).
If increasing the dosing of the Vertex compounds does not differentiate them further in efficacy, then this consistency in benefit “may truly be a class phenomenon,” and similar results should be expected from any competitor add-on agent out there, he suggested.
In Wednesday’s trading, shares of Vertex (VRTX) have gained about 22% to $161.26, while Galapagos and Proteostasis have dropped over 4% and 3%, respectively.
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