Chicago-based Morningstar, those investment mavens with a truly independent analyst function (Morningstar has no affiliate that handles securities underwritings, or M&A advisory roles -- decidedly unlike JP Morgan and Morgan Stanley) just made Telaprevir®'s very likely win over legacy Schering-Plough/New Merck's Boceprevir® the basis for its "Top of the Heap" prediciton, this morning.
See it all here, but this is the most-salient bit:
. . . .Vertex ranked number 1 on our 2010 biotech takeout list, and we continue to believe the firm would benefit from the sales know-how of a larger pharma player like current partner Johnson & Johnson. The stock currently trades at a 25% discount to our fair value estimate, providing an attractive entry point for investors with a stomach for risk.
While Vertex also has a late-stage cystic fibrosis candidate and compounds in earlier-stage development, telaprevir remains the focus of investor excitement and the primary value driver of the firm. We give the drug a 70% chance of approval, 10% higher than our average Phase III drug. If telaprevir succeeds in clinching approval, our fair value estimate would rise to at least $50 (not including a takeout premium). With a drug on the market, we think Vertex could see profitability by 2013. . . .
Vertex is trading at $34.50 this morning -- and $50, before takeout premiums looks pretty good -- given that the FDA NDA is filed on Telaprevir, and approval is expected on-or-before June 2011. [Do your own due diligence, of course.] We'll keep you posted.