Vertex Pharma Off After Analysts Comment on Drug-Trial Halt

Vertex Pharmaceuticals  (VRTX) – Get Report shares dropped Thursday after the company said it’s halting development of its VX-814 drug for a lung and liver malady due to liver toxicity, and some analysts reacted negatively.

Vertex shares recently traded at $229, down 16%. They had gained 24% year to date through Wednesday amid enthusiasm for VX-814 and the Boston company’s other drugs.

As for the analysts, SVB Leerink’s Geoffrey Porges lowered his price target to $267 from $283, though he affirmed his rating at outperform.

The VX-814 halt “shows how bare” Vertex’s pipeline is, he wrote in a commentary, according to Bloomberg. 

Vertex doesn’t have nearly the pipeline it needs to sustain a company of its size, Porges said. So he expects acquisitions in the next year.

But Vertex management doesn’t have a good history with acquisitions, and investors won’t tolerate bad deals, Porges said.

Credit Suisse analyst Evan Seigerman wrote in a commentary that the liver-toxicity issue throws into question Vertex’s non-cystic-fibrosis pipeline, Bloomberg reports. But he still rates the stock outperform with a share-price target of $328.

After the VX-814 data, investors are “now concerned about the expansion beyond” cystic fibrosis, the company’s linchpin, Seigerman said. 

As for deal-making, Vertex is unlikely to purchase commercial-stage assets in light of management’s comments, he said.

After Vertex released its earnings in July, Morningstar analyst Anna Baran offered some positive comments. 

“Vertex reported second-quarter results slightly ahead of our expectations, with Trikafta, the triple combination therapy for cystic fibrosis, continuing to perform well and add new patients,” she wrote. Baran put fair value for the stock at $259.

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