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Vertex's Hepatitis C Drug Has 'Gold Standard' Potential
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Forbes.com
Peter Kang, 03.03.06, 12:39 PM ET
Deutsche Bank Securities initiated coverage of Vertex Pharmaceuticals with a "buy' rating and said the development-stage drug company's promising experimental drug candidate VX-950 has "gold standard" potential as a hepatitis C treatment.
"Despite a strong 52-week stock return of 269% fueled by increasing visibility of VX-950, we believe the commercial potential of VX-950 and an evolving early clinical pipeline represent meaningful upside to current valuation," wrote analyst Jennifer M. Chao, in a client note. "2006 to 2008 could be transforming years for Vertex."
Vertex is expected to begin a three-month study in the second quarter, which will determine the benefits of VX-950 compared with pegylated interferon and ribavirin, the current standard of care. Vertex plans to begin Phase III trials in 2007 with the goal of filing a new drug application in 2008.
The lead drug candidate, which addresses market opportunities of $3 billion, is not the only potential blockbuster for Vertex. The company is also developing VX-702 for rheumatoid arthritis with preliminary results of a Phase II study expected in the second quarter.
"While the mechanism of action is intriguing, we remain cautiously optimistic about an uncharacterized safety profile," said Chao.
The analyst initiated a price target of $53 on Vertex shares.
"Lead product VX-950, an oral inhibitor of the hepatitis C virus, has the potential to be the new gold standard of care and dramatically improve the HCV treatment algorithm based on mid-stage proof-of-concept, in our view," the analyst said.
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