Thanks for replying. I wasn't looking for inside info of course, more an insiders perspective on the sentiment toward the program. vrtx claims to have delivered a few compounds to nvs but who knows what their prospects are. You said it first, I think in sum like most biotechs, vrtx is going to have to get lucky!
Also really getting sick and tired of seeing insiders dribbling out shares at lower and lower prices.
It's been quite a while since I've been at Vertex, so the Novartis deal wasn't done. I haven't talked with my friends about it for a couple years (they were excited, of course, when it happened). So I have no "inside" information to speak of.
However, I find myself agreeing with bioduuude (and wondering if he's an ex-Vertexan). In my opinion, this was a big deal done more on hubris than on real capabilities---for example, their ability to screen many kinase targets efficiently were orders of magnitude less than my current company's ability when this deal was signed (and that's probably still true). I've seen Josh parade around his "new chemical space for kinase cores" talk---and superficially, it looks just wonderful. I believe that they're working on building diversity by synthesizing new heterocyclic cores (tough, but more effective then hanging more spinach off of exsisting scaffolds) But I'm not seeing a bunch of stuff coming out in patent literature. There aren't any real indications (from literature/presentations) that indicate that stuff is pushing into preclinical.
Drug discovery is hard work, and it takes some luck. I don't see Vertex doing anything that puts it head and shoulders above the rest of "us".
I understand the deal. I was wondering as a former insider whether kurly could give us general insights into the relative enthusiasm within vertex for the nvs deal now that its a couple of years in. Will there be positive output from the collaboration or is it a dead end?
>>Do you see any real progress or potential in the vrtx/novartis kinase deal? Seemed like a heck of a deal for vrtx at the time. <<
Like most deals of that type and magnitude, looks and PR can be deceiving.
Vertex gets lots of cash from Novartis to ramp up research. This helps builds infrastructure that can be used not only for Novartis deal but elsewhere.
If Vertex can deliver, they get some nice milestone payments along the way, plus royalties at the backend.
Ramping up the infrastructure also ramps up Vertex' fixed costs. If they can't continue to expand elsewhere, or else sign other deals, ultimately those additional costs become a noose around their neck. With their nest egg rapidly being whittled away, the noose is tightening.
A huge partnership like the one with Novartis--a partnership that probably puts around half the company indirectly on Novartis' payroll-- makes Vertex less attractive as a takeover candidate. Obviously, different people will have differing opinions as to whether this is a good thing or not.
My personal take is that the Novartis deal reflects at least some hubris on Vertex' part: "We're the smartest baddest drug boys on the block, bring it on!" Yeah, sure. So far, several years in, I see no indication they have anything to back up that attitude. Instead, we have a much larger company with no more money (there hasn't been a deal of any note since Novartis, and certainly no additional drug revenue), with tremendously greater fixed costs as a result of the Novartis rampup. My guess is that without the Novartis deal, Vertex would be in much better shape right now. Smaller, lower cash burn, probably more money in the bank and with the exact same pipeline or better (who knows what resources that would otherwise have been used to develop proprietary compounds were instead divertex to the Novartis effort?)
If they manage to deliver on the Novartis deal, and by that I mean deliver something GOOD, not just deliver some crap compounds to fulfill their milestones, then it would be time for reassessment. But right now, I see the Novartis deal as a sad legacy of the "more more more bigger bigger bigger me me me" thinking at the very top of the bubble.
I, for one, am in no position to take issue with your assessment. But it sounds sincere. That, coupled with the disappearance of virtually all quarter over quarter revenue and the unrelenting insider sells and nepotistic management structure (I owned Adelphia stock) make me loose what little confidence I cling to with VRTX.
Having worked at Vertex for a few years, and now (blissfully, in comparison) back at large Pharma, I'd say that bioduuddes' assessment of Vertex is quite accurate. I still have several friends back at the company (some of whom I recruited)---and I'd love to say that it's a very well managed company, but it isn't. It's run by a small cadre of egomaniacs who have some real strengths in research, but not in managing a company.
I no longer have any of my vertex stock. I still follow it, and I'd love to see them successful, but I don't see it. If another wave of "biotech love" hits the markets, then Vertex will certainly go up (they do a pretty good job of "selling the dream" than most). But it's unlikely that they will ever be a successful major (or minor) player in the pharmaceutical industry. And it's too bad---as much as I dislike their management, they have several excellent scientists on staff.
thanks for your reply. i agree with your assessment that VRTX is a gamble. it is not for the faint of heart folks and for those who can not efford to lose their investment. My strong buy recommendation is for the other folks who can tolerate the risk. This is a high risk/reward situation. if one of their compounds shows good results in phase II i think the market would reward us early before the completion of phase III. I also believe that pralnacasan, even though in collaboration and thus lesser profit, could lift VRTX if the results show promise later this year. Have a good day.
Yeah, that euphoria was definitely intoxicating. I could tell you about another stock I had (still have, sold none) that plummeted 98% from its high...And this is a big old company, not a fly by nite internet deal. Anyway, made some good moves, made some mistakes, but came out OK with most of my money parked on the sideline at the peak of the bubble.
OK, why haven't I closed out Vertex? Good question. Obvious question, given my stated sentiments. The real reason is that, as I mentioned, I have a decent amount of cash I set aside at the market peak. What I have in the market now, if it turns to dust, won't dust me. So I'm gambling with it. I see three potential upside possibilities for Vertex: 1) Buyout, probably in the low-to-mid 20s if it happens in the near future; 2) p38 and/or ICE goes the distance, although this probably won't impact the stock positively in the next couple of years unless these compounds show incredible efficacy in clinic (not likely). Neither compound will be a drug for probably at least four years, but within 2 we might see enough data to pop the stock; 3) the second generation AIDS compound makes greater inroads than expected. Their second generation AIDS compound, which everyone expects will get FDA approval this year, looks reasonable enough and has one great selling point: It would be the first treatment on the market to have once a day dosing on the label. That's a good hook; too bad most patients that can afford treatment are already on a protease inhibitor and doctors/patients are loath to change a treatment that is working.
Anyway, I see three things that could pop the stock. Only one (number 2) has the potential to really pop it into the stratosphere, and the chances of that are modest. But you can dream. So I'm letting it ride, as they say. If it hits $20+ in the near-term, I may take my money off the table and count my blessings, but I'll re-evaluate if/when the stock ever hits that mark again.
At this point, I would not recommend anyone with a weak heart or anyone with money they can't afford to see evaporate invest in this stock. And, pragmatically speaking, if I weren't already invested, I probably wouldn't choose this as my favorite craps shoot. But I'm lazy and I understand the company 'cause I've followed it long enough. At least I know where the demons are in this one.
Thanks for your reply. My story is somewhat the same as yours except that I did not unload any shares during the bubble. I also agree with you about some of the missteps by VRTX management. However, IMHO most of their mistakes was similar to ours (at least mine)--becoming intoxicated by the euphoria of the biotech bubble, that is thinking they would be able to easily raise as much money they needed for several years until they could produce a blockbuster. Having said that I still do not understand why you are holding VRTX shares and not saying any positives that may exist. It seems to me that as an intelligent sounding individual, you must see some positives in VRTX or you should not be holding it. One's past history with a stock or any emotional feelings one may have towards a stock is no reason to hold it unless a person believes that the stock has a good chance to appreciate from where it is at any given moment. So do you see any positives in holding VRTX? If not why aren't you selling. cheers.