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Goldman Sachs Downgrades Vertex (VRTX) to Sell; Becomes More Cautious on CF Combo Program

November 2, 2012 7:56 AM EDT Send to a Friend
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Price: $66.92 -2.02%

Rating Summary:
    19 Buy, 12 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 23 | Down: 10 | New: 20
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Vertex Pharma (Nasdaq: VRTX) shares are lower in early trading Friday following Goldman Sachs cutting its rating on the company from Neutral to Sell, while trimming its price target from $55 down to $43. The firm cites third-quarter results and the NACFC conference held earlier in the month.

Goldman is taking a "more cautious" view on Vertex's key pipeline program (cystic fibrosis, CF combo) and sees a limited number of catalysts heading into 2013. The key catalyst is Vertex initiating a Ph3 program for Kalydeco+VX-809 in the first-half of 2012. Goldman stated:

"We do not view disclosure of the final design of this trial as a positive catalyst, as we do not expect VRTX to share any additional efficacy data from the Ph2 trial. In 2013 we also expect VRTX to report data from a Ph2 trial of Kalydeco+VX-661, but we have a cautious view on the probability of success. Lastly, in our opinion, Phase 2 safety data is the key driver of value creation for hepC drugs and VRTX’s recently announced cross-company collaborations with JNJ and GSK do not change the fundamental value of VRTX’s nuc (VX-135) given we only have Phase 1 data."

Currently, the firm is modeling 10 percent revs CAGR through FY15 if the CF combo is successful. If not, Goldman is looking at negative 2 percent CAGR.

For an analyst ratings summary and ratings history on Vertex click here. For more ratings news on Vertex click here.

Shares of Vertex closed at $50.48 yesterday.




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