Any ideas why Vertex's stock is down to $29.93 - CTOAN?

Vertex's stock closed down $0.23 yesterday to $29.93.

With what I percieved as good news coming out of Barcelona I'm surprised.

Did the financial community expect a +80% in less than three months of tx?

CTOAN - If your reading this I really like your thoughts....as everyone's.

[chcnme]

I didn't have power yesterday afternoon (no computer) and hadn't checked VRTX yet (after the EASL).   I am admittedly stock market stupid, but I'm assuming the reason it's down is because investors were not happy with the data.  I can say this much (which is from a very personal stance,  which I don't want anyone taking "wrong" - I'm just putting it here to try to help or to shed light from a personal point of view)  - my father has not gotten a call yet from his broker on his VRTX  (or had not yesterday).  He probably didn't expect to after he saw the EASL data (which he thought looked very good.)  When he sees the price this morning, he might be expecting a call from his broker, or - he might call him.  He might not, too.  Last advice (about two or three months ago) was to hold onto it for now  (then).   I think he's had it about a year - a little longer, has not been too worried yet,  but I think he will be when he sees the price this morning. If he gets a call today, or if he calls to get advice, I'll let you know what it is - for what it's worth.  

Here's a few articles I just googled.  

http://www.chron.com/disp/story.mpl/ap/fn/4718826.html

http://www.businessweek.com/ap/financialnews/D8OHONQO0.htm

[FlGuy]

I'm not a sophisticated investor.  I'm not a sophisticated anything.  I get involved in poop threads. In my opinion. vrtx is currently at about it's 5-year average.  Last year they had a loss of about $200 million.  My guess is that potential needs to turn into approval, revenue and begin to approach something that resembles profitability.  But what do I know, I though Enron had legs.

[miked]

poop threads?

[FlGuy]

Not to pick on Goofy, just an example:
http://www.medhelp.org/forums/hepatitis-community/messages/729.html

[chcnme]

Yeah... poop?   lmao.   Well...seems no one here is worried, so just forget what I said, OK?  Well... put it this way - he didn't know it was down, and all he said when I told him it was down was "the market can be weird - I think it'll come back up."   He said he might call . I doubt he will.   He didn't sound concerned about it.  But if he hears something, I'll still let you know.

[andiamo]

Stocks often rise on expectations and then drop on news.  VX950 had high expectations; perhaps higher than was reasonable (whatever that is).  When I listened to the Vertex presentations last year, the analysts where asking questons that led me to believe they were expecting a silver bullet that would convince the FDA to stop the trial and approve the drug as they did for many of the AIDS drugs.

Even though the news is very good, it is probably less than the analysts hoped for, so the stock dropped.

[chcnme]

I'm gonna tell ya what'll sell and not come down -- Goofy's Pit Stop Story!  OMG - I just read it, and it's better than silver bullet.  Thank FLguy - I needed that!  

[jmjm530]

As is usually the case, expectant news is already built into a stock price. Prior to Sunday's news release, analysts predicted that the market would be satisfied with SVR rates similar to what was presented at the meeting.

The results did get positive analyst feedback and is probably at least one reason why the stock rebounded after lower trading Monday morning. The stock is now up over 2% from before Sunday's meeting.

It's very important to keep in mind that these were only TWELVE WEEK results and the 12-week dosing was always a long-shot in many minds, not to mention the difficulty of drawing conclusions from such a small group.  Once the larger 24-week data gets released we will have a more realistic picture of how the drug will work in the real world.

Principal investigator Dr. John Hutchinson had this to say: "..The high rates of RVR observed in the telaprevir groups in PROVE 1, and the fact that some patients have remained persistently viral negative 20 weeks after stopping the 12 weeks of telaprevir-based therapy, suggest that we may be able to shorten the treatment duration in genotype 1 HCV patients..." And Dr. Ira Jacobsen, another prinicapl investigator had a similarly bullish outlook.

As to the stock price, no doubt it will go up and down a number of times until the 24-week dat is released later this year.

-- Jim

[Willy50]

Well for starters, it's up 3% right now; 30.85.  I expected a far grander move in either direction.  I think us heppers have a longer view on this than Wall Street.  I almost think they are waiting for a wholesale buying spree OR selling spree.  One thing they do very well is looking to see (via charts) what their neighbors are doing investment-wise.  The chart tells you when to buy or sell sometimes without requiring any inherent knowledge about the company.  

Here's a brief summary of what I think; it looks promising, it's going to get even better in upcoming weeks.


Here's what Wall Street may be having palpitations about;

1)  The stock may have been overbought for starters.  The stock has adjusted to the right size now especially based on current available data.

2)  There was not a "home run" in trial results; neither safety or in efficacy.  (I still think it was a second or third base hit but have to admit too little data, quirky results which skewed the "real" (in my mind : )) results.  In the end there are not incontrovertible results (I guess that this refers more to the D arm study (17 participants) than comparing the overall results of 175 TVR participants)

3)  SAFETY CONCERNS.  Actually, perhaps this should be #1.  The 9% drop out rate (from December) raised up to 11% in 12 weeks.  What will happen when the Prove 3 trial starts and there is a leg with 24 weeks of triple therapy?  Keep in mind that 11% comes pretty close to 4 times the drop out leg of the control group in 12 weeks.  Can one argue that is a very significant amount of sides? (the flip side of this that the drop out rate of SOC may be about 13%.  Can one compare a the two percentages if 12 weeks becomes all that is required to treat with TVR?  Once approved the sides can be treated and so the ultimate drop out rate should be lower and below the current SOC drop out rate).

4)  Mixed or Uncertain Data.  Wait until there are official SVR rates.  Until the Prove 1 "12 and 12" data rolls in or when the Prove 2 starts to trickle in.  Wall Street will then better know where this stock should go.

5)  Shrinking Market or Profitability.  If other compounds start nipping at the heals of Vertex they may have a shorter potential term of profitability.  They may be in the lead NOW but for how many years will they be part of SOC?  This may factor in since if there are diminished returns then the risks may seem far less tantalizing.  For us....... this is one area that you could rationalize that the price of stock does not always reflect the effectiveness of the compound.  5 new drugs that work well may be good news for us but will tend to depress the stock prices (but not us. ; ))

This is at least a start at explaining the stock price yesterday and today.

Best,
Willy

[jmjm530]

Miked:
Did the financial community expect a +80% in less than three months of tx?
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Not disagreeing with you, but clarifying for others. The "80%" figure you cite is end of treatment response, not SVR rates. If the 12-week dosing produced 80% SVR rates, you might have seen the stock price actually double as that would have been beyond anyone's expectations. Hopefully, what we will end up seeing in the 24-week group is somthing similar to an 80% SVR rate.

-- Jim

[chcnme]

aww -- thank you so much for that take and explanation.  Very interesting. Appreciate it!    

[Willy50]

I'm glad if it helped.  I don't know if it's correct.  I don't think it is any one factor but rather a combination of those mentioned earlier.  I think the biggest is the safety fear since the efficacy issue seems good.

It may not have been clear but I should have included that the 13% SOC drop out rate reflected a 48 week period.  Should a longer period of triple therapy be needed than 12 weeks the drop out rate could increase further from the 11% listed.  Well see (but not for some time) what the drop out rate is in the 24 week triple TVR/SOC therapy that takes place in one of Prove 3's arms.

The stock at about 1:00 EST is UP about 4.5% @ $31.47 or so.  One investment group yesterday recommended to SELL; that the new price be set at about $19.00.  

For now it does not appear that Wall Street agrees with that opinion since the stock continues to trend upward.

Best,
Willy

[Dave D.]

Anyone know when the Prove 2 results will be released or presented?
Thanks,
Dave D.

[jmjm530]

Willy: The stock at about 1:00 EST is UP about 4.5% @ $31.47 or so. One investment group yesterday recommended to SELL; that the new price be set at about $19.00.
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And another set the price at $45. LOL. So so much for consistency. As to the sfx profile issue, I think Sunday's presentation cut both ways. It confirmed the rash and gastro issues, but also confirmed that this would not be a deal breaker. The other point you raised, about competitive PPI's, etc, is also very important. If Telaprevir was the only drug out there, then it would definitely have stronger appeal from an investors point of view, 13% sfx, or not. However, let's say one of the other PPI's, behind Telaprevir in the pipeline,  has similar results but with a better side effect profile. That could make Telaprevir less desirable investment wise. The one thing I do know about the market is that you can never predict what will go on. At least I can't by past experience :)

-- Jim

[Willy50]

Jim; add the $19.00 to the $45.00= $64.00
now divide by your two "professional" appraisals of the stocks value;

$64.00 divided by the two wild assessments= $32.00

at 2:54 EST the stock sat at $31.94.    : )  (but still rising dammit)

Now you know as much as I do.  Go forth and prosper.

Willy

[3txsofar]

I think the principal reason it went down was that Maxim Capital grabbed the headlines by slashing its' price target from $38 to $19 and cutting the rating to sell.  UBS, which is very highly thought of,  and Rodman & Renshaw both reiterated their positive ratings, but it was the $38 to $19 that got the headline.

So, why did Maxim do that?  My guess, they were protecting their own or some allied firms short postion. Their reasons were baseless, e.g. they said that the PHASE III effectiveness of vx-950 would only be about 50%.

Maxim already has been found to be rating stocks high that they were in the process of dumping.  For that, see:

http://www.fool.com/investing/general/2007/03/09/quick-take-altair-marcial-and-maxim.aspx

Interestingly, prior to the EASL, Maxim had a buy rating on Idenix.  Well, as we all know, Idenix had bad news at EASL.  But Maxim made not a peep about that.  

The smarter folks were probably holding or buying yesterday, but Maxim was able to panic a lot of investors who weren'e able to interpret the Vertex conference and press release for themselves.