Vertex Pharmaceuticals, Inc. (VRTX)

NetscribeBiotech (77.13) Submitted: 5/30/07 7:01 AM : Start Price: $30.44 VRTX Score: -3.21

Getting oneself established firmly in the pharmaceutical market on the back of a strong product portfolio is a lengthy and expensive procedure. It gets even tougher when the playing field is comprised of giants like GlaxoSmithKline, Roche, and Novartis to name a few. Thus it comes as no surprise as Vertex, the biotech player initially decided to go in for a business model where the revenue will come from collaborative and developmental agreements with other pharma giants.





The company now feels that time is ripe to transform itselves into a true biotech company which will be involved from screening a potential molecule to marketing it to physicians and patients. Vertex is betting on Telaprevir, its lead oral hepatitis C protease inhibitor to take that final step. The phase II b clinical trials, which came out on April, showed promising results and the company expects to initiate the Phase III clinical studies by the fourth quarter of this year. Since the company does not have any previous experience in the late stage clinical studies or commercialization, the risk that they face is immense. To add on to this Vertex will have to make a sizable investment to scale up its operations to become a commercial drug player.





On other fronts trials related to VX-770, the oral drug designed to address cystic fibrosis and VX-702, addressing rheumatoid arthritis are on track. For VX-770 the phase II study is expected at Q2 this year and for VX-702, the data from phase II a trial is expected in Q3.





The company thus expects to see a spike in expenses as it scales up its research capabilities and gets ready to go for the final stages of Telaprevir drug. With the revenue flow still restricted to collaborative agreements the scrip is not going to see any major upwardly movement in the coming months.

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