Current prices of successful midsized biolech companies are approaching a low enough level where larger pharmaceutical companies with ample cash and market cap looking for drugs in orphan diseases with a diverse pipeline of future drugs, represent profitable acquisition opportunities. Vertex has orphan disease drug pricing with a cash flow already building in CF with a number of additional possible breakthrough drugs advancing in CF, Neurological disease, as well as potential larger market opportunities in oncology,
pain, and influenza. Vertex has little debt, a billion in cash on hand, potential cost savings from reducing it's head count in terms of managers and executives when acquired by a larger drug company with established marketing world wide and the need to keep only the most productive researchers at Vertex. Would not be surprised to wake up one morning soon with a low ball takeover offer from Biogen, SNY, GILD or JNJ all of whom have stated recent interest in taking advantage of current low valuations of potential takeover target companies.. Then it would be interesting to see if Vertex management could fend off a takeover given it's minority ownership and the need for institutional shareholders owning the majority of shares to book some profits this year. Longs in Vertex have to hope that the takeout offer price when it comes at least translates into current analyst target prices averaging 140 to 150 per share.
On Yahoo' s Stock Twist this was posted about VRTX:
T Rowe Price added 6.5mln sh in Feb & increased stake now to 10.52% 25mln sh
Totally agree with you. It looks like they do not give a damn about PPS. Evaluating the interview, I thought it was a disaster. Only the negative was accentuated. I personally believe VRTX should not participate in these types of conferences unless it has something good to announce. The format of these types of conferences are such that the interviewer is almost in total control by only asking questions that suits his/her firm's agenda--in this case just about all the questions asked were the types that led to the warts that hang around the CF drugs. For example the interviewer did not ask a single question about the status of any non CF drugs in the pipeline and Stuart was not smart enough to steer the discussion into other products--not that there are many but, nevertheless it could have had a better affect.
is it really a worthwhile effort to highlight potential problems of the lead product? VRTX ought to focus on the big picture: sales potential iva and orkambi, VX-661, second gen. compounds, non cf pipeline etc.
Right now VRTX keeps providing the impression that it is facing problems with orkambi. The sp reacts accordingly.
In my opinion the only hope we have is for Orkambi sales to increase. I think some investors have been spooked by all the talk of Orkambi discontinuations which management does not seem to have a good handle on. The hope is that some of those who discontinued due to adverse side effects may try to go back on Orkambi. You may want to listen to the yesterday's taped conference call that Barcley conducted with Stuart.
Good luck to all of us longs.
Are you suggesting that until Leiden is fired and Hilary backs down (once she is elected and learns more about R&D costs) that VRTX's price will not go up? What if sales of Orkambi meet investor expectations?
Thanks for your thoughts!
Market cap is below expected lifetime revenues of currently approved products alone. Add pipeline, assets, and human capital. Who wouldn't buy it at this point? This is crazy!
It allows Leiden to PRETEND he is working hard to boost pps. So far his actions at the helm have not had very good results for pps because investors for the most part consider VRTX as a one drug pony with several competing drugs in the works.
In my opinion the BOD should fire Leiden and find someone who is capable of beefing the pipeline.
VRTX has a bloated number of employees which must include many scientists. My question is what are all of these scientists doing? How about having some of these scientists work on other possible drugs and if they pass phase I then find big pharma to partner with VRTX whereby they can underwrite the cost of phase 2 and 3 and if successful VRTX could get royalties on the sales. I think I have the answer to that as to why it will not happen. It is because VRTX leadership has BIG egos and consider turning their inventions to others for development beneath them!
why is VRTX participating in such conferences when they have nothing to talk about, but potential drop-out rates for orcambi? Such discussions will not enhance investors trust in the company.
As has been mentioned before, in addition to Leiden getting all of those free shares, and other companies developing Cf drugs to compete with VRTX and the lack of other products being pushed through the pipeline, the other factor that is affecting pps is the Hillary factor. Threats of drug pricing, even though I doubt it it will happen with the republicans in control of both houses, nevertheless, has spooked investors.
Here is the statistics about biotechs for the past 6 months:
VRTX down 38%
NBI down 28%
BTK down 28%
IBB down 28%
I believe VRTX has gotten hit harder because of the above mentioned reasons unique to it.
I agree that a take-over is highly unlikely. Guess, all of us don't understand why VRTX has lost one-third of its value in the last few months. There have been no negative setbacks that might explain the drastic loss in value.
100% with you. With the CEO gets so much total compensation from his job and the high price of the company, I do not see VRTX is a takeover target although on the spot for a decade...
I hope I am wrong about this but I just do not believe VRTX is a good takeover candidate. Its present market cap is $20+B. A 1/3 premium makes a buyout cost around $27B which makes it somewhat a large investment for even some of the pharma biggies. Add to that Leiden's concentration on CF at the expense of slowing other products through research as well as competition from other drug companies with their CF drugs nipping at VRTX's heels-- I simply am not very optimistic about a buyout. My hope is that VRTX's additional CF drugs will cover more patients and revenue would increase soon.
As I said I hope I am wrong because unfortunately a good portion of my investment is tied in this stock.