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Vertex big winner in 1Q biopharma

April 29, 2017

Vertex Pharmaceuticals (VRTX) was the big winner Friday in the wake of a slew of biotechs and drugmakers issuing first-quarter reports Thursday.

On the stock market today, Vertex rose 0.75% to 118.30 after climbing as much as 2.6% to its best level since January 2016. Meanwhile, IBD’s 425-company Biomed/Biotech industry group edged higher.

Celgene (CELG) and Bristol-Myers Squibb (BMY) rose 0.1% and 0.7%, respectively.

AbbVie (ABBV) stock dropped below a buy point temporarily achieved Thursday at 66.89. Shares fell 0.2% to 65.94 on Friday. AstraZeneca (AZN) stock fell 2% to 30.250.

For Vertex, investors are now keyed in on its triple-pill treatment for cystic fibrosis, Leerink analyst Geoffrey Porges said in a report Friday. He sees an 80% chance of Vertex successfully bringing the triple-pill regimen to market.

Vertex will decide on the Phase 3 strategy for the triple-regimen in the latter half of 2017. The biotech is currently evaluating four next-generation drugs to be used in combination with tezacaftor and ivacaftor, two cystic fibrosis drugs.

Porges raised his price target to 132 from 128 and kept his outperform rating on Vertex stock. He noted investors likely prodded Vertex stock on its raised 2017 guide for cystic fibrosis drug Kalydeco to $710 million to $730 million.

Catalysts In Sight For Celgene

In a separate report, Porges boosted his price target on Celgene stock to 146 from 141 and kept his market perform rating. Though a 26% miss in sales of psoriasis and psoriatic arthritis drug Otezla led to an overall sales miss, Porges noted catalysts in Celgene’s future.

Celgene’s portfolio is undoubtedly broader than its peers,’ and management appears to be focused on creating long-term shareholder value through a focus on later-stage clinical programs,” he wrote, noting Celgene has key trials in multiple myeloma, non-Hodgkin’s lymphoma, brain tumors and Crohn’s disease.

“We have generally been cautious in our view of the several late-stage candidates in Celgene’s pipeline; however, we now expect several key inflection points from late-stage candidates in Celgene’s pipeline in the next couple of years,” he said.

AbbVie Bucks Hard

AbbVie “bucked the rocky earnings season trend,” meeting consensus views for first-quarter sales and growing revenue from immunosuppressant Humira by 23% in the U.S., Porges said in another report. Adjusted income beat by 2 cents.

“Results from the other biopharma names with drugs in the immuno-oncology market have been volatile with some notable misses mainly attributed to overall market weakness,” he said. “AbbVie’s result suggests that part of the trend may also come from share loss.”

Given the solid performance of Humira, AbbVie’s biggest moneymaker, Porges is more constructive on AbbVie’s outlook for the year. For the year, AbbVie sees sales topping $2 billion in the U.S.

Porges boosted his price target on AbbVie stock to 72 from 71 and kept his market perform rating.

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