Vertex Pharma's Orkambi Gives It Huge Potential, Says Barclays

• Vertex Pharmaceuticals Incorporated VRTX shares are up 13 percent year-to-date, although never breaching the $140 mark before August.
• Barclays’ Geoff Meacham upgraded the rating for the company from Equal Weight to Overweight, while raising the price target from $120 to $150.
• Orkambi’s adoption may be faster than was earlier anticipated and there may be nearer-term upside to the Street forecasts, Meacham said.

Orkambi was approved in the US on July 2 for “cystic fibrosis (CF) patients who are homozygous for the F508del mutation.” Analyst Geoff Meacham said that conversations with CF experts suggest a higher adoption rate than was previously expected.

Even with modest efficacy, 80-90 percent penetration can be expected within 12 months, lending upside to the Street estimates, Meacham commented. Orkambi would also ramp consistently ramp over this period and receive “high levels of awareness and interest” from patients and parents, Meacham added.

Barclays noted, “reimbursement and access seen as a peripheral issue (surmountable hurdle rather than major roadblock; access coming within one month from prescription).”

The worldwide Orkambi estimates for 2016 and 2017 have been raised from $2.1 billion to $2.2 billion and from $3.2 billion to $3.5 billion, respectively. The estimate for 2015 has remained unchanged at $395 million.

“Additionally, we continue to anticipate pipeline progress with phase 3 data from VX-661/Kalydeco expected next year and a next generation corrector expected to enter the clinic, both of which could support multiple expansion,” Meacham wrote.