We are reducing our probability of success and long-term market penetration rates, which lowers our out-year probability-adjusted worldwide sales estimate for Vertex’s CF franchise to $2.5 billion from $3.2 billion and our valuation range to $65-69 from #$%$ Still, shares remain undervalued, in our opinion, and we believe today’s selloff is overdone. We would use today’s weakness as a buying opportunity,” said Abrahams.
The Vertex pill is expected to be far more expensive than Arikace, as it's expected to make a significant difference to the quality of life of those who have the CF gene mutation it targets.
What's well worth noting here is that this is just a pill to counter one of the main effects of the mutation, as opposed to a cure.
The suggested pricing of Arikace is around $30,000 annually, which from memory is based upon the pricing of Tobi. Doubtless it is the Tobi pricing alone which supports Insmed's revenue projections.
But there is very good reason to believe that Arikace will deliver a significant improvement in quality of life compared with that which patients have been used to with Tobi. One imagines that this would warrant a significantly higher price.
The CF population is estimated at 70,000. If half of them have psedomonas infection and Insmed is able to charge $50,000 annually we would be looking at an annual $1.75 billion from CF.
p.s. I don't have a clue as to what proportion of the CF population has PA infection.