Vertex Pharmaceuticals (VRTX) – Get Report shares fell on Friday after the company nixed a closely watched effort to develop a therapy for a rare genetic disorder that affects the lungs and liver, though analysts took the price drop as reason to potentially jump in.
Vertex announced on Thursday that it halted its efforts to develop a drug to treat alpha 1 antitrypsin deficiency, also known as AATD, an inherited disorder that can lead to liver transplants in children.
The study, called VX-864, met its primary endpoint and was well tolerated, Vertex said, and the drug’s mechanism was proved to work, but the “magnitude of the treatment effect observed [was] unlikely to translate into substantial clinical benefit.”
Analysts were quick to focus on the Boston-based company’s existing pipeline of cystic fibrosis and other treatments, as well as its plans to continue efforts to develop treatments for AATD, calling the knee-jerk selloff a buying opportunity.
Barclays analyst Gena Wang cut her price target on Vertex to $285, though said she sees a buying opportunity in the stock weakness, even if the company’s future pipeline remains “… a show-me story,” especially given Vertex’s other drugmaking efforts in development, and its intellectual property. She has an overweight rating on the shares.
Piper Sandler analyst Edward Tenthoff also sees the recent share price drop as an opportunity to step forward, noting Vertex’s cystic fibrosis franchise remains strong and its medicated kidney disease treatments also appear promising. He also has an overweight rating on the stock with a price target of $347.
RBC Capital analyst Brian Abrahams also sees value in Vertex’s cystic fibrosis franchise and called the share price at current levels an “…attractive long-term entry point on price weakness, even if market will be looking for VRTX to prove themselves.” He too has an outperform rating on the stock, though cut his price target to $242.
Shares of Vertex were down 12.82% at $188.97 in premarket trading.