Summary
- Vertex Pharmaceuticals has announced positive efficacy and tolerability results for the first of its two 3-drug candidates for cystic fibrosis.
- I expect FDA approval of whichever combo Vertex submits, and that this will help derisk investing in the stock due to much longer patent protection and a much larger market opportunity.
- I also like the company's mid-stage and possible franchise opportunity in oral, non-narcotic pain drugs and in rare diseases beyond CF.
- Valuation and the many risks associated with drug development make Vertex a risky stock.
Introduction - Riding out some squalls
Vertex Pharmaceuticals (VRTX), an innovator in rational drug design, appears to yours truly to have come through a mildly challenging period in a strong position. This is a stock that is beginning to remind me of a mini-Apple (AAPL) circa about 2005-06, in that it always appears expensive but always moves on to new highs. Later we found out why. Most recently, VRTX has had a third (interim) CFO appointed. Based on the Q4 press release and the conference call, I'm not seeing a reason to avoid the stock. I read through the latest 10-Q(the 10-K is not out yet) and noted no red flags or even amber ones. Please do your own due diligence on that.
