Vertex Pharma Is 'Hyped,' H.C. Wainwright Sees 35% Downside

In a report published Monday, H.C. Wainwright analyst Andrew S. Fein maintained a Neutral rating and $85 price target on Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX). The analyst believes that the Orkambi launch is "hyped."

"Last week, just 5 months after POTUS indirectly praised VRTX at the State of the Union as a poster child of precision medicine, VRTX backfired by showing just how much its type of precision medicine might cost the country: $2.2B per year, chronically, to treat 8,500 eligible CF patients with F508del so far," Fein stated.

The analyst believes that while Orkambi is recognized as a "mediocre drug at the population level," within that population some patients would benefit to a large extent from the drug, while others might not benefit at all, which makes the drug "exactly the opposite of precision medicine."

"Then, in our view, Orkambi has been priced for the patients in whom it actually works, and we look forward to seeing: (a) the prescription pattern; (b) the patient compliance; and (c) the reimbursement model in the patients in whom the drug does not show clinical improvement," the H.C. Wainwright report said.

The analyst believes that these parameters would determine the peak penetration of the drug, as well as the potential fluctuation in that peak, over time, although the initial commercial ramp would depend on patient/clinical density and reimbursement logistics.

"Overall, we believe that commercial expectations for Orkambi have already peaked and are priced in. Going forward, the US ramp is likely to meet or miss those expectations, while the EU reimbursement and launch ramp remain wildcards, with eventual news flow from EU reimbursement dialogue more likely to disappoint than not," Fein added.