Odds Of Vertex's Pipeline Success Aren't Dismal As Some Fear, Bernstein Says

Vertex Pharmaceuticals Incorporated VRTX shares have come under selling pressure recently, given investor concern regarding diversity in the pipeline for this cystic fibrosis-focused biopharma.

The Vertex Analyst: Bernstein analyst Analyst Vincent Chen initiated coverage of Vertex with an Outperform rating and $275 price target.

The Vertex Thesis: Vertex's pipeline is underappreciated and offers substantial upside optionality, Chen said in a note.

The cystic fibrosis franchise could reach sales of about $10 billion by 2025, with patent exclusivity into the late 2030s and strong potential for lifecycle management. This, the analyst said, largely supports the stock's current valuation.

Despite investors selling the stock after recent setbacks, the analyst is more optimistic, especially with its multiple programs in potentially high-value indications and having near term catalysts.

The failure of alpha-1 antitrypsin deficiency, or AATD, drug VX-814 that was subsequently discontinued has more to do with idiosyncratic toxicity, likely specific to the molecule, Chen said, citing experts in AATD.

VX-864 is a separate shot on goal, he added.

"We believe the odds of success are not as dismal as investors believe, we see near term catalysts that have potential to drive upside for the stock, and take a positive view on the stock," the analyst concluded.

VRTX Price Action: At last check, Vertex shares were up 1% to $214.