The Goldman analyst is apparently unhappy with the answers to his questions about 661 during yesterday's conference call. Suddenly he's 'cautious' on the CF program because of the answers on 661 from Vertex execs. What's the apparent reasons for his caution?
Because firstly, 661 data will be released when the study is completed rather than release interim data like the company did with 809 which unltimately resulted in confusion regarding interpretation of the data, despite the fact the drug in the final analysis has statistically significant benefit in d508 homozygotes, and is proceeding into Phase 3 trials next year, with a high probability of being able to treat more than half the CF population wordwide in 2014.. (The company would obviously now choose to release the 661 data at the end of the study to avoid repeating the same experience they had in revealing data with 809.)
Secondly, by going ahead with the Phase 3 trials with 809, (which according to Peter Mueller is two hears ahead of 661 in development,), the GS analyst thinks that implies less confidence in the success of 661. Peter Mueller reiterated to the GS analyst the theoretical reasons for more potential clinical efficacy for 661 as a corrector over 809, but stated that the purpose of doing the 'proof of concept' Phase 2A clinical trial underway (obviously) is to prove it, and he cannot predict the results, he can only report them at the end of the study. (The GS analyst evidently wants an answer before the study is done.... not exactly a scientific approach, but. certainly another excuse to knock down the price of the stock.) This is incredible buying opportunity for long term investors who understand the value of the Vertex pipeline. I would not be surprised if a hostile takeover materializes before other clnical trial results are revealed and start driving the stock price up again.
Who.and Why: Any large pharma losing their patents on past blockbusters, and wanting to diversify their R&D pipeline with a diversified group of drugs with high revenue generating potential in numerous serious diseases with unmet needs to make up for the loss of their high revenue generators. e.g.JNJ, Roche, Pfizer, Merck, Abbot,, Astra, BMY.
Purely looking at cash flow - it appears to me Vertex is going to burn a little cash next year. Given consideration of the timing of clinical results, potential revenue streams, and assets on hand... I think focusing on 809 and the additional 770 indications are in Vertex's best short term interest.
The analyst clearly did not understand the differentiation between 809 and 661.
Vertex has 1.2 billion in cash. Even a small burn rate next year would be insignifcant to investors looking for many billions in sales of 809 and 770 in 2014. Remenber Pharmasett got bought out for 11 billion for a single Phase 2 drug in hep C which has yet to enter Phase 3 testing.
Vertex pipeline has much greater potential.