Analyst Lowers Vertex Target

Ahead of the Bell: Analyst Lowers Vertex Target

From Associated Press (November 29, 2011)

Vertex Pharmaceuticals will face challenging competition for its hepatitis C drug Incivek, but the drug maker also has a promising cystic fibrosis treatment, according to a report from Citi Investment Research & Analysis.

Citi's Dr. Yaron Werber lowered his price target on the stock to $40 from $59 but maintained a "buy" rating.

The Food and Drug Administration approved Incivek, a pill, earlier this year, and it rang up about $420 million in sales in the third quarter. Hepatitis C treatments are seen as a big opportunity for drug makers by analysts who expect the disease to become a growing health problem. The virus can lead to life-threatening liver damage and is the main cause of liver transplants in the United States.

Werber said in a research note, released late on Monday, that he expects Incivek to capture a substantial share of the market for hepatitis C treatments in the near term.

But it could face competition from potential treatments being developed by Pharmasset Inc. and Inhibitex Inc. Merck & Co. also received approval for another pill, Victrelis, earlier this year.

Werber also said some doctors are finding Incivek hard to use.

"Sales are off to a solid start, but despite posting one of the best drug launches ever, Incivek's tail might be short, and sales might peak in 2014 and decline quickly thereafter due to competition," Werber wrote in the Monday note.

Vertex Pharmaceuticals Inc., based in Cambridge, Mass., has said it has more than a dozen active clinical trials for other potential drugs. In October, it filed for U.S. and European marketing approval of a cystic fibrosis drug called Kalydeco. Cystic fibrosis is a genetic disease that causes thick mucus buildup in the lungs.

Werber said that drug has yielded solid late-stage study data, and he expects it to be approved in next year's second quarter for patients with a certain genetic mutation. He said cystic fibrosis represents another lucrative market with little competition.


 

Posted: November 2011


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