MARKET TALK: Vertex Pressured On Fears Of Incivek Slowdown 10/28 10:31 AM
10:31 (Dow Jones) Vertex (VRTX) reports one of the strongest first full quarters of sales for a new drug in recent memory--$420M for hepatitis C treatment Incivek. However, its stock is down 3.7% to $41, extending this month's weakness as the broader market has surged. Canaccord says launch momentum for the drug may be waning, citing slow early 4Q growth and an expected leveling off of prescriptions. It cuts its price target on the stock, up 17% this year, to $43 from $50. (firstname.lastname@example.org)
If they really mean it, they will pump price first before bringing down. They bring price down so weak investor giveup share. They can't keep saying drug is peak. I am launghing on Market who pretend to believe that Growth is stall and drug sale is peak already after just 4 month launch while same analysts predict Pharmasset worth about same size as VRTX because they have as good drug in phase II.
They either caught on wrong side and trying to control price as much as possible before they cover their short or they are being paid by large pharma company to keep price in check.
If Incivek sale peak only after 4 month, how Pharmasset or any other new drug able to even sale anything since Incivek will cure everyone before they get chance to get on market.
There will be no market left in few years for Hepatitis C if Incivek has sale peak in just 4 month.
I was short yesterday prior to market close in anticipation for a slight miss and can't believe that I was able to get out at today's open with a small profit even with their blow out earnings.
Now I'm long. This is really just an opportunity to load up. If VRTX is smart, all they have to do is release a PR next week, outlining their Oct. sales then do a regular monthly sales report.
You can't tell me that 4 million shares are being sold based on the Q results and two insignificant downgrades. There was ample opportunity for nervous longs to sit on the sidelines. This is HUGE volume...again, I ask...where are all the shares coming from? There is truly a disconnect here!
I don't plan on selling, but it amazes me what's going on today!
Copy of an e-mail I sent to Peter...
"Canaccord says launch momentum for the drug may be waning, citing slow early 4Q growth and an expected leveling off of prescriptions."
Expected leveling off of prescriptions??? Expected???
It takes 6 mths to 12 mths from FDA approval for a drug to get through formulary review.
A key comment made in the Vertex conference call yesterday was that "half the US population will have access to this drug after completion of formularies" - which I speculate will be within 3 mths.
So Vertex has already initiated the process for insurance coverage for the lion share US patients in 1 quarter. This is impressive to say the least.
That said, this formulary process is the same accross all pharma and is the 'norm'.
So the 'norm' expectation for any drug is that it is going to take at least 6 mths to even 18 mths to really see the true leveling off of growth. NOT, as Canaccord states, within one quarter.
Because of the simple precedent that most people need health insurance to afford any health care above the norm. And with a $50 k price tag, no one should expect insurance not to be a very large part of Vertex's revenue stream.
So any analyst that expects a straight line lineal uptake in prescriptions on any drug in less than 5 months should be fired for their incompetence... their opinions discounted... fired.
Vertex does not sell ipads, or cars... they sell a high cost medical therapy.
Any analyst that downgrades Vertex at this point, clearly do not understand how pharma gets the lion share of their revenue and is putting the proverbial revenue cart before the insurance horse.
The fact that VRTX exceeded analyst expectations by 400% before the normal formulary process is completed, or could reasonably expected to be completed by any large pharma company is AMAZINGLY bullish.
With that in mind, I find it very, well, ignorant, that there seems to be this preoccupation with the 'shape' of a graph over its 'size' when taken into the context of the normal formulary process.
Again, Vertex does not sell ipods. There is not a 3 month ramp up than level like a retail product.
And how do I know my points are dead on. Look at MRK. Really look long and hard at MRK. How well have they done? Why?