H.C. Wainwright: Vertex's Long-Term Value Is In The Pipeline

H.C. Wainwright’s Andrew S. Fein believes that the bull thesis for Vertex Pharmaceuticals Incorporated VRTX can no longer by supported only by Orkambi, and that the company needs to focus on developing and diversifying its pipeline.

Fein reiterated a Buy rating on the company, with a price target of $155.

Orkambi Discontinuations

Vertex Pharma noted that the revenue decline seen in 1Q for Orkambi was due to the discontinuations that occurred in 4Q15.

“Management reported that these discontinuations were attributable to respiratory adverse events observed with Orkambi in some patients during the first 3 months of treatment, mirroring observations during clinical development and attributed to off-target effects of lumacaftor,” Fein mentioned.

The analyst stated that the 15 percent discontinuation rate was not surprising, given that some Orkambi erosion was expected following the successful launch and rapid uptake seen in 2015.

Also, the discontinuations to date were due to respiratory effects rather than perceived effectiveness, although the impact on revenue was likely to persist.

Focus Should Be On Pipeline

Fein believes that “the long-term value for Vertex should now be placed on the company’s power position to build further on CFTR modulation by developing treatment combos and the diversity of their clinical pipeline in non-CF indications.”