Vertex Pharmaceuticals discovers, develops, manufactures, and commercializes medicines for serious diseases. The company focuses on developing and commercializing therapies for the treatment of cystic fibrosis (CF) and advancing its research and development programs. It markets ORKAMBI (lumacaftor in combination with ivacaftor) for the treatment of patients with CF 12 years of age and older who have two copies (homozygous) of the F508del mutation in their cystic fibrosis transmembrane conductance regulator (CFTR) gene; and KALYDECO (ivacaftor) for the treatment of patients with CF 2 years of age and older who have the G551D mutation or other specified mutations in their CFTR gene. The company also develops Tezacaftor (VX-661), a corrector compound that is in a Phase III development program in combination with ivacaftor in multiple CF patients; VX-152 and VX-440 that are CFTR corrector compounds in Phase II clinical trials, as well as VX-659 and VX-445 that are CFTR corrector compounds in Phase I clinical trials; and VX-371, an investigational epithelial sodium channel, which is in a Phase II development program. In addition, it engages in the research and mid-and early-stage development programs in the areas of oncology, pain, and neurology. The company sells its products primarily to specialty pharmacy providers and wholesalers in North America, as well as government-owned and supported customers internationally. Vertex Pharmaceuticals Incorporated has collaborations with Cystic Fibrosis Foundation Therapeutics Incorporated; Parion Sciences, Inc.; CRISPR Therapeutics AG; Moderna Therapeutics, Inc.; BioAxone Biosciences, Inc.; Merck KGaA; and Janssen Pharmaceuticals, Inc. The company was founded in 1989 and is headquartered in Boston, Massachusetts.
(Summary) (Company) (Chart)
1 August 2017
1yr Target $178.22
Payout Ratio 0.00%
1yr Cap Gain 16.33%
1yr Tot Return 16.33%
EPS (ttm) $1.04
EPS next yr $3.06
Forward P/E 50.08
EPS next 5yr 69.69%
1yr Price Support $213.25
Market Cap $38.66 Bil
Revenues $2.13 Bil
Earnings $259.90 Mil
Profit Margin 12.15%
Quick Ratio 2.60
Current Ratio 2.70
1yr RevGR 64.92%
3yr RevGR 11.88%
5yr RevGR 3.83%
1yr EarnGR ---
3yr EarnGR ---
5yr EarnGR ---
1yr DivGR ---
3yr DivGR ---
5yr DivGR ---
Vertex Pharmaceuticals is in the business of discovering, developing, manufacturing and commercializing medicines for serious diseases. The Company uses precision medicine approaches with the goal of creating transformative drugs for patients in specialty markets. Their business is focused on developing and commercializing therapies for the treatment of cystic fibrosis, or CF, and advancing research and development programs in other indications, while maintaining financial strength.
The Company's two marketed medicines are ORKAMBI and KALYDECO, which together are approved to treat approximately 40% of the 75,000 CF patients in North America, Europe and Australia. ORKAMBI (lumacaftor in combination with ivacaftor) is approved as a treatment for approximately 25,000 patients who have two copies (homozygous) of the F508del mutation in their cystic fibrosis transmembrane conductance regulator, or CFTR, gene. KALYDECO (ivacaftor) is approved for the treatment of approximately 4,000 CF patients who have the G551D mutation or other specified mutations in their CFTRgene. Our goal is to develop treatment regimens that will provide benefits to as many patients with CF as possible and will enhance the benefits that currently are being provided to patients taking our medicines.
Research and Development Programs
Vertex is also engaged in a number of other research and mid- and early-stage development programs, including programs in the areas of pain and neurology. The Company also has entered into third-party collaborations pursuant to which they are engaged in the discovery and development of nucleic acid-based therapies for a variety of diseases, including CF. The Company plans to continue investing in research programs and fostering scientific innovation in order to identify and develop transformative medicines. Current research programs include programs targeting cystic fibrosis, adrenoleukodystrophy, alpha-1 antritrypsin deficiency, sickle cell disease and polycystic kidney disease. Vertex believes that pursuing research in diverse areas allows them to balance the risks inherent in drug development and may provide drug candidates that will form their pipeline in future years.
Research and Development Programs
Vertex's approach to project selection and drug design aims to enhance their ability to discover and develop drug candidates by combining transformative insights into the causes of serious diseases with innovative approaches to therapeutics. Historically, the Company's approach to drug discovery focused on the research and development of small molecule drugs, which has been validated through success in moving novel small molecule drug candidates into clinical trials and obtaining marketing approvals for ORKAMBI, KALYDECO and INCIVEK (telapravir). Recently, the Company has expanded their research capabilities to include additional innovative therapeutic approaches with a focus on nucleic acid-based therapies. Vertex believes that attempting to identify multiple approaches to the treatment of diseases enhances their potential to develop treatment options that, either as monotherapies or combination therapies, are transformational in nature.
They focus their research activities on developing products that would be prescribed by specialist physicians for the treatment of rare or life-threatening diseases. They begin by applying knowledge of human genetics and human biology and focus on validated targets that have shown a causal relationship with respect to serious diseases. They then generate biological assays to query the underlying biology of disease and utilize clinical biomarkers as tools to predict clinical response. They leverage their expertise in assay automation, medicinal and process chemistry, modeling and informatics, drug metabolism and pharmacokinetics, toxicology, material sciences and formulation to develop, select and advance drug candidates that have the potential to offer transformative benefits and have an efficient path to approval. The Company's current research programs include programs targeting cystic fibrosis, pain, adrenoleukodystrophy, alpha-1 antritrypsin deficiency, sickle cell disease and polycystic kidney disease.
To augment their internal research programs, Vertex seeks to collaborate with biopharmaceutical and technology companies, leading academic research institutions, government laboratories, foundations and other organizations as needed to advance research in our areas of therapeutic interest as well as to access technologies needed to execute their strategy. They have established such relationships with organizations around the world and intend to extend and leverage that experience to further our research efforts to discover transformational medicines for serious diseases.
In addition to the continuing research efforts in CF, the Company's research and mid- and early-stage development programs currently include VX-371 for the treatment of primary ciliary dyskinesia, VX-150 for the treatment of pain and VX-210 for the treatment of acute cervical spinal cord injury. They are also collaborating with CRISPR Therapeutics AG, or CRISPR, on the discovery and development of potential new treatments aimed at the underlying genetic causes of human diseases using CRISPR-Cas9 gene editing technology and Moderna Therapeutics, Inc., or Moderna, to identify and develop messenger ribonucleic acid, or mRNA, therapeutics for the treatment of CF.
My Path Forward
There's no doubt that Vertex Pharmaceuticals is an expensive company by several measures. But it's also a company that growing extremely fast by several measures. So I think there's room for initiating a position in this company at the right price. And that's where a well defined stock chart comes in handy. Looking at the chart above it can be seen that the stock price popped about two weeks ago. Usually those gaps will fill in so I intend to wait for a pullback to around $140 per share for a more reasonable entry. I believe it may be possible to obtain that price simply based on the beta of 1.80 which should allow for decent volatility in the share price.
A rise above $200 per share would also raise the one year estimated capital gain to 27%. And despite the estimated one year price target of $178, I believe these shares could easily rise even higher to above $200 per share.
There are other fundamentals that both attract and repel me as I look at the potential of adding shares to my portfolio. The P/E and the PEG are somewhat higher than I like so that gives me pause but the earning growth rate will easily offset this if it continues into the future. The 69% forward growth rate, on the other hand, is very appealing to an investor despite the fact that it doesn't pay a dividend.
So my path forward is to attempt to get into these shares by putting in a buy near $140 per share. That may or may not happen any time soon but I believe that's a pretty good buy order. I would also be an investor that would be buying these shares to hold onto for several years and therefore am willing to wait for a better price. Traders may differ from this strategy but I'm not a day traders nor am I a short term swing trader. Those individuals may have a different strategy.