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Vertex Pharmaceuticals: An Application of Modern Pharmaceutical Strategy & Valuation Methods

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This paper presents a strategic analysis with innovative recommendations for Vertex Pharmaceuticals based on context through April 2018 . It also discusses current literature regarding pharmaceutical valuation methods and applies a variation of Monte Carlo simulation to the firm in order to present a trading recommendation.
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Vertex Pharmaceuticals:
An Application of Modern Pharmaceutical Strategy & Valuation
Methods
Awarded Honors by Brandeis International Business School
Kyle Ryder
B.A. Business and Economics
Brandeis University, Class of 2018
Senior Honors Project
Brandeis University Undergraduate Business Program 2018
Primary Advisor: Daniel Bergstresser, Assoc. Professor of Finance, Area
Head,Finance
Secondary Advisor: Bhoomija Ranjan, Assoc.Professor of Marketing
Table of Contents
I. Executive Summary ........................................................................................................ 1
II. Purpose ........................................................................................................................... 1
III. Research Questions ......................................................................................................... 2
IV. Methodology ................................................................................................................... 2
V. Data................................................................................................................................. 4
VI. The Company .................................................................................................................. 4
a. Industry Overview ............................................................................................... 4
b. Company Background.......................................................................................... 5
c. Cystic Fibrosis ..................................................................................................... 6
VII. Products .......................................................................................................................... 9
a. KALYDECO® .................................................................................................... 8
b. ORKAMBI® ....................................................................................................... 8
c. SYMDEKO® ...................................................................................................... 9
VIII. Context ............................................................................................................................ 9
a. Pipeline ................................................................................................................ 9
b. Drug Development & Approval Process............................................................. 10
c. Regulatory Environment .................................................................................... 10
IX. Analysis I ...................................................................................................................... 11
a. Macro Environment ........................................................................................... 11
b. Micro Environment ............................................................................................ 17
c. Recommendations .............................................................................................. 19
X. Analysis II ..................................................................................................................... 21
a. Past Investment Performance ............................................................................. 22
b. Discounted Cash Flow (DCF) Model ................................................................. 23
c. Real Option Valuation (ROV) ............................................................................ 24
d. Monte Carlo Simulation ..................................................................................... 26
XI. Valuation ....................................................................................................................... 27
a. Capital Structure & Financing ............................................................................ 27
b. Discount Rate .................................................................................................... 27
c. Pro-Forma Projection, FCF Valuation ................................................................ 28
d. SYMDEKO® Valuation .................................................................................... 29
e. Triple-Combination Therapy, Application of Monte Carlo Simulation ............... 30
f. Results ............................................................................................................... 31
XII. Target Stock Price ......................................................................................................... 34
a. Investment Recommendation ............................................................................. 36
XIII. Limitations .................................................................................................................... 36
XIV. Future Considerations .................................................................................................... 37
XV. Acknowledgements ....................................................................................................... 39
XVI. References ..................................................................................................................... 40
XVII. Exhibit (Microsoft Excel Spreadsheet, Attached Separately) .............................. Appendix
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I. Executive Summary
This project applies strategy frameworks and valuation methods to Vertex Pharmaceuticals to present
tactical recommendations as would a consultant in the pharmaceutical and biotech industries. In addition,
it creates a trading recommendation based on a financial valuation projection model. It achieves both of
these by first describing the company’s context and then using frameworks as a lens to analyze the firm,
industry, products, customer needs and regulatory environment. The next section includes a discussion of
various pharmaceutical valuation methods and applies one to Vertex. Some expository follows covering a
recommended trading decision based on the analysis and considerations for the longer-term future.
II. Purpose
Vertex pharmaceuticals is the leader in medication treatments for cystic fibrosis, a severe life shortening
disease caused by a family of genetic mutations that affect the lungs and breathing. The company already
serves about 45% of the global market with their two marketed drugs, KALYDECO® and ORKAMBI®.
They have recently gained FDA approval for a double combination therapy which will begin selling in
2018. The pipeline product of most interest is a triple combination therapy currently in late stage clinical
trials, that if approved, would allow them to serve 90% of the global CF patient market. This makes Vertex
a very interesting company to analyze.
Analyst opinions differ greatly over Vertex’s value. It currently trades at more than 50 times earnings and
is now profitable for the first time in 2017. The blockbuster revenue potential the firm maintains will only
be realized for shareholders if they can launch efficacious pipeline products, secure payer coverage
worldwide and partner with patients to assist them along their disease journey.
2
III. Research Questions
This paper investigates and answers the following research questions:
1. What is the current strategic direction of Vertex Pharmaceuticals? How does this fit into the context
of the 2018 pharmaceutical/biotech industries? Which tactical strategies can be implemented to
improve the firm’s execution of goals and performance?
2. What are the biopharmaceutical valuation methods? Which one is best and for whom?
3. What is the value of Vertex? Is the recommended trading decision buy, sell or hold?
IV. Methodology
The methods used to analyze Vertex include careful study of industry reports, current events,
company filings and announcements in order to determine strategic objectives. The frameworks used are
The 4Ps of Marketing to analyze the company’s micro environment and Michael Porter’s Five Forces to
analyze the macro environment trends. Framing the company with these paradigms gives insight into the
major challenges of the firm and elucidates targets for potential action to fix them. The recommendations
that stem from these analyses present viable solutions to the problems.
The valuation portion of the report analyzes the literature to build a financial model that contains
assumptions based on the industry and company research, history, and disclosed company investment
projects. The projection includes both a scenario (low, average, high) analysis as well as a sensitivity
analysis that shows which variables are likely to create the largest projection changes. To do this, the model
adds projections for the current company with a terminal value, the recently approved SYMDEKO® and a
triple-combination therapy in development.
3
The current company value is forecasted using a Free-cash-flow (FCF) method which requires a
5-year pro-forma projection built off the previous five years of quarterly financial data. A terminal value is
also estimated using an assumed perpetual growth rate. All of the cash flows are then discounted and
summed to arrive at the present value of the company. The discount factor used is the weighted average
cost of capital discount rate (WACC) because all of the expected firm cash flows have the same business
risk and leverage as the firm itself. For any flows that do not fit these criteria, another project or divisional
discount rate should be used. WACC is estimated using the CAPM model and average corporate bond
interest rates.
The product, SYMDEKO®, is valued according to a simple discounted cash flow (DCF) method.
Here, assumptions about the market size and price are given by research and historical precedent to predict
the cash flows which are then discounted by the appropriate rate.
The triple-combination therapy is valued according to a Monte Carlo Simulation which accounts
for a probabilistic range around the input variables and returns a distribution of outcomes. This value is
incorporated into the enterprise value using different scenarios: mean, low, and high at a 90% confidence
interval.
An implied share price is then calculated based on the valuation given by the above methods and a
trading recommendation is given after comparing this result with the current market share price.
The model is interactive so that the reader may modify or update any assumptions to view the
effects of the change on the projected value and returns. The DCF method is compared to other ‘back of
the envelope’ valuation methods including using the industry multiple method.
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V. Data
The report uses data and research from a multitude of sources. A summary of the data sources is given in
the table below.
Data
Source/Type
Financial Data
Company 10-Q Filings, Bloomberg5
Market Data
Analyst Reports, CF Foundation, Journals
Product Data
Company Filings, Announcements
Industry Reports
ThomsonONE
Pricing & Timeline
Firms Executives, CF Foundation, History
Empirical, Survey Data
PubMed, Journals
VI. The Company
a. Industry Overview
The Pharmaceutical and Biotechnology industries are players in the healthcare value chain
whose mission is to discover, develop and commercialize medicines. This paper will use the terms
pharmaceutical and biotechnology or biotech fairly interchangeably. A classical distinction is
made between pharmaceuticals and biotech where pharmaceutical companies are focused on
chemical-based treatments whereas biotech is focused on biologic molecule development.
However, most modern companies in the industry are found somewhere in-between these two
definitions and are best considered as ‘biopharmaceuticals’. As such, either term will suffice to
refer to companies that develop and market prescription medications.
5
Nearly one trillion dollars are spent on medications each year which accounts for a
significant portion of global healthcare spending.
1
The industry has grown since the first
organizations launched and the demand for medicines continues to expand as populations rise and
understanding of treatment advances. The companies in these industries are characterized by long
investment horizons due to the lengthy and extremely risky drug development process. However,
once approved, launches have massive potential for success because of the patent protection issued
for new drugs. This incentive propels firms to undertake the massive investment risks required to
develop novel medicines and therapies.
There is a large current trend of early-stage firms which are often born out of academic
laboratories as a result of the efforts of the many distinctive scientists researching there. These
biopharmaceutical firms focus on treatment of niche, ‘rare’ diseases that have less than 100,000
patients and are now treatable because of noteworthy advances in precision medicine. They are
often able to garner the backing of venture capital investors who incent these companies to
eventually IPO or exit by becoming acquired. As a result, there is a ton of merger and acquisition
(M&A) activity in the field as larger companies seek to add to their drug pipeline portfolios by
buying the research expertise and intellectual property held by others.
b. Company Background
Vertex Pharmaceuticals is a fully integrated research and commercial medicine developer focused
on developing therapies for “serious” diseases. Vertex was founded in 1989 by Joshua Boger and found a
niche in the gap between biotechnology and traditional large pharmaceutical firms. As previously
mentioned, the biotech industry was classically characterized by intense research in drug discovery that
1
(Berkrot, 2016)
6
involved biological compounds such as bacteria or enzymes in contrast with the pharmaceutical companies’
chemical-based drugs. Boger was a leading researcher at Merck before founding Vertex and had significant
experience designing research programs and successfully developing and commercializing products.
At Vertex, he instilled a culture of research and innovative science. This culture often created
“analysis paralysis” where no hasty decisions were made until all of the evidence was known and complete.
The company utilized a unique method to screen for drug candidates by starting with knowledge of the
cause of the underlying disease and then searching for compounds that have possible indications on the
defective proteins or enzymes. In contrast, most drug companies used High-Throughput Screening to
rapidly assess thousands of candidates to determine which ones may be viable, then looked for a disease to
which they could apply them. Vertex developed and licensed several products to larger portfolio
pharmaceutical firms which eventually saw their patents expire in the subsequent years. In the 2010s, there
was a shift from this model of research and licensing to developing and selling their own product line. The
company revenues are now almost entirely dependent on the Cystic Fibrosis (CF) treatment products.
Vertex is based in Boston, Massachusetts which is a major biotechnology innovation hub due to
the many academic research institutions in the area. They serve as a major source of scientific talent for the
companies. The firm also has labs in California which is renowned for its technology focused culture.
c. Cystic Fibrosis
Cystic Fibrosis is a disease caused by a mutation in the CFTR protein gene. This mutation causes
the patient to have defective or non-existent CFTR proteins in their lung cells. The result is the inability of
the lung cells to transport salt and water across the membrane leading a build-up of mucus in the lungs that
makes it hard to breathe and life much more difficult. Ultimately, death occurs due to lung damage. Though
life spans for CF patients have improved thanks to improved treatment protocols and new medicines, the
median life span is still only 29 years.
7
There are over 2000 known mutations of the CFTR gene that cause CF. Each case requires both
standardized and customized treatments to help patients live longer better lives. To obtain this disease,
children must have inherited two defective CFTR genes from each of their parents. The disease affects
primarily Caucasians with an incidence rate of approximately 1/2500
2
. There are approximately 75,000
cystic fibrosis patients in North America, Europe and Australia. 30,000 are estimated to be living in the
United States based on figures from the Cystic Fibrosis Foundation’s disease registry.
3
As recently as 50 years ago, little was known about the root cause of CF and patient outcomes were
extremely poor with most not surviving to adulthood. Treatment typically involved daily “thumping” on
the patient’s back to loosen and help cough out the excess accumulated mucus. CF treatment programs
began becoming more commonplace at hospitals across the U.S. and new inventions like steam tents for
patients to sleep in were created to help prevent the mucus build-up.
The discovery of the CFTR protein, the underlying cause of CF, gives much hope that there will
someday be a cure. This leads back to Vertex who is the leading manufacturer of treatments that target the
deficient CFTR protein. These drugs in combination with other symptom reduction treatments has
significantly helped patients breathe better and live better lives.
VII. Products
Vertex has a long history of developing treatments for a wide range of conditions including HCV,
Rheumatoid Arthritis, and heart conditions. However, the current strategy is primarily focused on
treatments for Cystic Fibrosis. The company currently has two commercially available products, with a
third that was just approved in 2018 with launch early this year. The existing treatments were approved for
about 45% of all CF patients with this likely to rise further due to the new approval.
2
(Scotet, 2012)
3
(Cystic Fibrosis Foundation, 2018)
8
a. KALYDECO®
The first product, ivacaftor (KALYDECO®) is part of a class of drugs called potentiators that help
keep the defective CFTR proteins open and near the surface of the lung cells so that it can help clear mucus
through the transport of salt. It is taken twice orally each day by patients and was the first approved medicine
to treat the underlying cause of cystic fibrosis. It came to market five years ago in 2012 and the company’s
strategy for the product has been to continue to expand the label indications so that more patients with
different mutations can benefit from this drug. This is done by continued research studies and new data. In
2017, the FDA approved KALYDECO® for use in five additional mutation indications allowing 600 more
patients to gain access to the drug and 2017 product revenues to reach approximately $800 million.
4
b. ORKAMBI®
The second drug, ORKAMBI®, is a combination therapy pairing lumacaftor and ivacaftor.
5
The
former fixes the defective CFTR protein in a way that allows it to be pushed to the proper place on the cell
surface. The latter functions as mentioned previously to open the CFTR protein and keep it stable at the
surface to facilitate the transport of chloride. This combination drug only treats patients 6 and older that
have the F508del mutation which is the most common CF mutation.
6
This population is approximately
11000 people in the United States. It is also taken orally each day. The 2017 product revenues were about
$1.2 billion. There is nearly full uptake for the F508del population older than 12 (8500 patients) and close
to maximum uptake for the 6-12 year old population that was approved in mid-2016. The continuing
strategy relies upon approval of reimbursement agreements in Europe, in which Vertex made deals in
Summer of 2017 with Italy and Ireland. Only around 60% of the patients in European countries have full
access to the treatments. One particular struggle for Vertex has been gaining payer coverage in France
4
(Vertex, 2016)
5
(Cystic Fibrosis Foundation, 2016)
6
(Cystic Fibrosis Foundation, 2017)
9
where they have been selling products, but have not yet recorded any revenues due to not being able to
reach an agreed upon reimbursement price with the government.
c. SYMDEKO®
Going forward, Vertex seeks to continue its development in the CF space. There is currently a
double combination therapy of Tezacaftor (VX-661) and ivacaftor (KALYDECO®) that has undergone
FDA review and been approved. It is being launched under the brand name SYMDEKO®. They had priority
review and extremely positive phase 3 data that led to expectation of a positive a decision that was
announced in February 2018. This therapy is hailed as a ‘next-generation’ protein modulator and has shown
significant improvement in mucus clearing. It is also likely to cannibalize some sales of KALYDECO®
because of the additional benefits and some overlap in the patient populations that it is approved for.
However, the expected expansion of treatment will far outweigh this in the long-run.
VIII. Context
a. Pipeline
The most exciting part of the pipeline for investors are the several triple-combination CF therapies
in development. These have all shown very positive top line data and have indications for patients with
only a single F508del mutation. If one of these therapies is approved in the coming years, Vertex will have
drugs that can benefit over 90% of all cystic fibrosis patients. This is a massive increase in their market
share. It has implications of doubling or more their revenues. Vertex hopes to submit an NDA for one of
these by 2021, but will require a few more years of intensive research and spending to advance the pipeline.
Vertex has an important partner and investor in the Cystic Fibrosis foundation. The initial funding for the
CF program development was funded by this group that was founded by parents of patients to research new
therapies. Biotechnology companies need large amounts of financing and this advocacy organization
partnership represents a new model of gaining the necessary funds.
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b. Drug Development & Regulatory Approval Process
Critical to the understanding of the industry are the challenges of the drug development and
approval process. Once a drug candidate has been identified, it must undergo extensive testing and the
approval process (FDA in the U.S. and EMA in Europe) before being offered commercially as a product.
Most drugs never make it into development because they not only need to have evidence that it works, but
also reasonable commercial viability in order for the company to invest in the costs of development. It is
estimated that a new drug costs upwards of $1 billion in development spending and takes 7 – 15 years to
be approved for marketing. In the U.S., new drugs must pass the clinical trial process by testing and
presenting data to the FDA. They must meet the requirements for efficacy and safety through
implementation of the following research and development process:
Phase 0/Pre-clinical – Small dosage tests in humans, unlikely to benefit them
Phase 1 – Is it safe? What dosage is best?
Phase 2 – Is it effective for the diseases being studied?
Phase 3 – Is it better than other products? Either more effective or less side effects in
a randomized controlled trial (RCT)
FDA Approval – Is the data showing a favorable risk-benefit profile that would give
reason for approval
c. Regulatory Environment
After the election of Donald Trump as President in 2016, he rolled out a ‘100-day action plan’ that
included a proposition to streamline and speed up the drug approval process at the FDA. Pres. Trump then
appointed Dr. Scott Gottlieb as head of the FDA. This bodes well for the pharmaceutical industry because
Dr. Gottlieb has extensive background working in pharmaceuticals and health policy. He has hinted at a
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new initiative to allow ‘real-world data’ in the consideration of approvals. This is a marked change from
previous processes that rely heavily on only clinical data. Though Gottlieb will seem to allow for flexibility
in the process, he comes from a rigorous scientific background that will hopefully serve well to protect the
legitimacy of pharmaceutical products by protecting patient interests
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.
IX. Analysis I
The following analysis applies several business frameworks to Vertex to more clearly define and
understand the current competitive situation. This is done because the frameworks serve as a lens to more
accurately diagnose the current scenario of Vertex. From this analysis, several tactical recommendations
will emerge as changes or additions to the strategic plan. The paradigms used for this analysis are Porter’s
Five Forces to investigate the effect of macro factors that the company can affect through strategy, and the
4Ps of Marketing that show the micro factors over which Vertex has direct influence.
a. Macro Environment
This section uses the Porter’s Five Forces framework to investigate the macro environmental factors
surrounding Vertex.
Rivalry
Some context has been discussed previously with regards to how the industry functions
and Vertex’s place within the biopharmaceutical industry. They currently have the only approved
treatments for treating the root-cause protein deficiency that causes CF and enjoy a monopoly.
This however, will not last because the lucrative CF market will attract many new companies
looking to grab some market share. The incidence of the disease is not expected to grow because
7
(Clarke, 2017)
12
it is genetic and does not spread or get passed on with greater frequency. Market share is even
more important with this in mind as the approximately 75,000 patient population will not grow
larger overall. This is the case with many ‘rare’ diseases where there is a race between firms to
develop a better product and serve previously unmet medical need. There is little in terms of price
wars as it is disguised throughout the healthcare system. With the internet and services like
WebMD, more patients are taking care into their own hands and although doctors are the only ones
that can prescribe a medication, brand perception among end consumers is increasingly important.
The successful companies going forward will those who are able to adopt new technologies
(Artificial Intelligence, Virtual Reality, Machine Learning) and have a clear understanding of
patient needs.
Threat of Substitutes
There is little distinction between rivalry and substitutes in this industry while a drug is still on
patent. Once the patent expires and generic versions of the drug are produced a price-war begins as the
differentiating factor of disease improvement is now easily replicated. Interestingly, the field of bio-similars
is emerging which are in essence the generic versions of biologic protein therapies. There is a provision
under the FDA guidelines to accelerate the approval for certain bio-similar products and allow these
manufacturers to circumvent patents with only small changes in the molecule structures in hopes of
providing more affordable therapies. However, adoption of these treatments (only 7 approved at time of
writing) has been extremely slow both because payers do not trust the non-brand name to provide the same
level of efficacy and safety as the precedent medication and because doctors hesitate to switch a patient off
of a drug that is working well for a chance at saving money. Firms that produce treatments for these rare
diseases should be cautious of bio-similars in the event that the healthcare system starts accepting them
more.
13
Vertex has strength in research and development due to their history as a research focused
organization. Their unique drug candidate identification approach allows them to more quickly discover
and produce effective biologic molecules. This will help in the long-run against potential substitutes
because their manufacturing capacity can be flexed to produce more cheaply or even to extend patent life
by slightly modifying molecules. One weakness is their current strategy because revenues are mostly
dependent on Cystic Fibrosis as the only disease area. This exposes them to significant risk if a competitor
were to enter and break the monopoly thereby grabbing a large portion of market share. The firm also has
strong a strong pipeline which includes more treatments for CF, Pain, Cancer, Influenza and a partnership
with CRISPR Therapeutics to use their technology to develop gene-editing treatment for sickle-cell disease.
Vertex also has a strong commercial team as evidenced by the high level of uptake for patients in markets
that have coverage. The strong brand recognition and overall favorable PR view on Vertex gives the
company tremendous opportunity
Threat of New Entry
Vertex has long held a monopoly on root-cause CF treatments. They will continue to hold this, but
there are other companies hot on the tail who are lured by the high reimbursement prices even though the
target market is a fairly small rare disease. Galapagos NV has announced that it has positive data for one
piece of its triple-combination therapy that is in development. They are seeking a partnership with AbbVie
to help with funding this project. Protalix also has a drug in phase II development called PRX-110, that is
aimed to have mucus clearing benefits for all CF patients because it does not treat root cause. It is seen as
a potential competitor to KALYDECO®, but the more recent data has shown it to be less effective than
originally thought. Both of these competitors present a major threat the monopoly that Vertex currently
holds. At any point, a competitor that brings to market a product that treats mutations that Vertex does not
already cover or that shows greater efficacy with fewer side-effects will massively affect the projected sales.
In general, most firms will not be able to acquire the capital and intellectual property needed to enter the
market, but some will with enough time and resources.
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Suppliers/Collaborators
Vertex is itself the manufacturer and developer of its products. It does not have much reliance on
outside suppliers because it can make its own drug products and does so at a reasonable cost. The firm does
have several key collaborators to consider. The first, are the payer systems and governments that regulate
the prescription medication industry. The firm uses its relationships with these groups to negotiate
reimbursement prices for the products, thus giving financial incentive to invest in development and
provision of the therapy. Market access in Europe has been a long battle for Vertex in getting their CF
products covered under insurance. There have been particular challenges to gaining coverage in France.
The second, is the Cystic Fibrosis Foundation (CFF) which as an advocacy group is able to utilize their
influence to assist patients and to facilitate access to beneficial treatments (including Vertex products). This
partner is an important resource for Vertex because it provides patients with information and helps Vertex
with unique methods of financing due to their status as a non-profit third party entity. The CFF supports all
treatment efforts, including those of Vertex competitors, and as such Vertex should seek to constantly foster
a positive relationship with the group to continue to help increase the access to treatment regimens that
include Vertex’s products.
Other collaborators include large pharmaceutical companies that have licensing deals with Vertex
for promising early-stage treatments who have the commercial rights to sell the product if it reaches
approval. Vertex also has several deals of their own with investigational research groups in which they will
pay milestone payments for phases attained in development and be responsible for commercialization
should any of the molecules be approved.
Buyer Power
The end customers for Vertex are the CF patients and their care-givers/families. The disease is
genetic and as such is unlikely to grow as a total market but continuing to expand the label for the available
15
drugs will help patients obtain life-altering medication. CF patients are excited about the opportunity to
further improve their condition with the upcoming next-generation treatments and the newly approved
SYMDEKO®. Vertex has filed for regulatory approval for SYMDEKO® with the EMA for marketing in
Europe so that thousands of patients can get treatment for the first time. Access is a major factor for Vertex
customers.
The customers paying the real price of the products are the payer groups. A major concern for
access is the changing state of the healthcare value chain in terms of how payers (insurers) now prefer to
reimburse based on outcomes. Also, there are changing patient preferences for how they receive treatment
in that they prefer to receive a full set of comprehensive services and support like they do for other products.
With new technology that allows for tracking a patient all the way through their journey from diagnosis, to
treatment and the resulting improvements, insurers seek to leverage that advanced data to only pay in
accordance with the ultimate outcome level. This makes it critical for Vertex that the drugs have strong
effect on improving breathing capacity and that adherence to the exact regimen once prescribed is followed.
One major issue that arises in daily oral medication is that of adherence to the treatment regimen.
Additionally, since many CF patients are children they rely upon their parents or care-givers to get them to
and from doctor visits, administer thumping on their back, and keep track of the medication use. This
becomes a difficult task and people often forget when they last took their medication. To help solve this,
Vertex has an extremely strong patient access and support services division. One tactic they are using to
promote greater adherence is by partnering with PCI Services to deliver the months treatment dosages in a
special box. The packaging clearly displays key information about dosage timing, has dividers for each
week and custom labels for morning and night doses so that patients can more easily remember when they
last took the medication.
8
It is shown in the figure below.
8
http://pharmaceuticalcommerce.com/manufacturing-and-packaging/vertex-orkambi-medication-package-
compliance-package-year/
16
Source: Pharmaceutical Commerce
The patient access team also helps by assisting with financially distressed families who cannot
afford treatment, expanding the number of locations and ways where the drugs can be picked up, and by
helping patients get to experienced providers who are experts in CF. They facilitate conversation between
the doctors and patients to help monitor the treatment protocol and guide them to experts for any questions
or concerns regarding the medication and its effects. Patients’ health relies upon Vertex and it is critical to
their mission and to the goal of treating CF to support them at all stages of their journey through care.
Customers more than before demand ultimate service and transparency of their treatment.
17
Conclusions of Porter’s Five Forces
The five forces analysis can best be summarized as displaying that Vertex currently holds a strong position
in the CF disease area, but they are subject to a number of risks that may disrupt that position. These include
reimbursement challenges and new entries to the market.
b. Micro Environment
This section performs an analysis of the micro-environment of Vertex. Specifically, it uses the
4Ps of Marketing framework to investigate the internal company-controlled factors.
Source: Own Creation
Product
Vertex exclusively sells medication for Cystic Fibrosis. The current medicines are taken orally to
improve breathing by treating the underlying cause of the disease. The company also looks to expand
their offerings to other rare diseases.
CF Drugs, oral
Rare disease
treatments
18
Price
The Vertex products achieve fairly high reimbursement prices with ORKAMBI® priced at
$272,000 per patient per year, KALYDECO® at $311,000 per patient per year and the newly approved
SYMDEKO® $292,000 per patient per year. Though these prices may seem high as a sticker price, they
are actually within reason for the current healthcare system because the insurers are the ones paying most
of the cost. These payers agree to the prices upon the drug launch after negotiating with the producer about
the total social benefit that each treatment will create. This benefit measure includes things like quality of
life measures and increased productivity for both patients and their families. Once the price is negotiated,
it is locked in and neither party can change it until the length of the agreement ends.
Place
Vertex products are prescription only medications and as such are subject to the rules and
regulations of each country that they are selling into. The products are delivered to patient’s homes directly
via mail or can be picked up at a specialty pharmacy.
Promotion
The firm does little in terms of promotion. This is partly because there are not yet other competitors
on the market, but more so the nature of the target condition. A serious chronic disease like CF demands
treatment regardless of additional promotions.
Conclusions From 4Ps
Product is the most important of these micro factors because people only want the medication if it
is safe and if it works. Medicines with potentially severe side-effects are not tolerated well in the market,
even for people with serious diseases. Also, the drug must be helping to improve symptoms, or it will not
19
be prescribed. So far, Vertex has done well by creating products that help some CF patients breathe better
and have minimal side effects. Price is the second most important because it serves as an important factor
for access within the healthcare ecosystem. If payers do not adequately cover the costs, patients will not
go on drug, and no sales will be made for Vertex. Place and promotion are less important as the
prescription drug system cannot be altered and sick patients demand the medication regardless of
additional promotions.
c. Recommendations
From these analyses emerge several recommendations for Vertex to improve their position. As
demonstrated by the Porter’s Five Forces analysis, the threat of new entry is extremely potent. To help
mitigate the loss of market share upon a new entrant’s arrival the firm should seek to guard against
competition by developing brand perception as a patient inspired firm. One way that they might achieve
this is by providing industry leading patient support services. This could be in the form of new adherence
protocols because even with a such a serious disease as CF, there is a high rate of non-adherence to the
daily oral drug regimen. The company can provide a daily text message or a mobile application to remind
patients to take the medication. They can also seek to partner with a diagnostic company to determine the
level of drug in a patient’s system at a given time so that they know when to take the next dose. Vertex
may support patients by establishing a college support fund because many of the patients on the
medication are young and with the help of the treatment are living longer lives and wish to pursue higher
education. Lastly, continuing to the build out the online patient services cloud adds value by allowing
patients and their medical providers to communicate directly with each other to track the treatment
protocol. This notion of pharmaceutical companies providing patient support services is a developing
trend in the industry, but one which is necessary for success. The additional value they create is important
along with creating efficacious products and filing strong intellectual property patents.
20
Source: Deloitte University Press
9
Vertex should also seek to continue to create access to their products for eligible patients. This
may entail generating deep health economic (HEOR) data to gain payer coverage in the EU. This HEOR
data shows the efficacy of the products and analyzes the social benefit versus the cost of the drug. The
firm should also continue to negotiate strong, but justifiable reimbursement prices as they have done for
their products so far. Anecdotal evidence can also be a powerful tool in gaining coverage. One tactic they
may also look to employ is to provide discounted genetic testing to confirm which mutations that the
patients have and subsequently start them on the appropriate drug if eligible. A further application of this
technique using new technology would be to employ Artificial Intelligence (AI) on registry data from the
Cystic Fibrosis Foundation. This would analyze family trees and preemptively predict which people will
have the disease as new form of precision medicine.
9
https://www2.deloitte.com/insights/us/en/deloitte-review/issue-18/patient-engagement-strategies-
changing-patient-expectations.html
21
Additionally, to create more access, Vertex should seek to develop novel systems or partnerships
to help the under and uninsured get the life-extending medication. They have a lot of flexibility in how
this is implemented because the CLV of a customer is estimated to be around $10 million and spending
anything up to that amount to get someone on Vertex products is thus a worthwhile investment.
Vertex should seek to de-risk the company by expanding outside of CF as the only disease area.
To do this, they should seek to acquire to build R&D capacity for products that fit their existing strengths
around selling products for debilitating chronic conditions with a minimal sales force. Deep analytics is
the future of the industry and should be used to identify patient needs and add-value by catering to them.
Lastly, Vertex can create positive PR by partnering with advocacy organizations like the CF Foundation.
They also serve as a unique source of financing because those non-profit entities have access to funds that
they can then lend to the drug manufacturers on favorable terms since their interests are not purely
financial and can indefinitely delay the payback period.
X. Analysis II
This section first shows the past investment performance of the VRTX stock and continues with a
discussion of various biopharmaceutical valuation methods and their associated literature. It then posits a
simplified version of the LSM Monte Carlo method as the preferred choice for pharmaceutical pipeline
valuation and applies the method to Vertex. Further analysis continues by viewing Vertex’s potential as an
investment and recommends a trading decision.
The valuations in this analysis are rooted in corporate finance principles. It presents a
method of projecting quarterly pro-forma cash flows for the next 20 quarters using a set of
assumptions based on historical and future trends. It invokes the Free-Cash Flow (FCF) method
where the value of a firm is determined by analyzing the proportion of discounted cash flows going
to equity-holders versus bond-holders. It sums the projected discounted cash flows from the
22
currently available products as well as the expected NPVs of the recently approved SYMDEKO®
and the next generation triple combination treatment currently in Phase 3 studies. This product
combines the already approved tezacaftor and ivcaftor along with a new compound, VX-659. All
the cash flow to equity is considered as part of the returns of the firm and a target stock price is
determined by dividing the value of a firm’s equity by the number of shares outstanding. The
multiple methods discussed in the next section are frequently used by the industry to project the
value of the pipeline products amidst a set of uncertain conditions including contextual, technical,
and commercial challenges.
a. Past Investment Performance
Vertex’s stock currently trades at $161.89 as of day close April 12, 2018, which is more than 50
times its earnings. This is common among biotechnology stocks that have some indices citing industry
benchmark P/E ratios of more than 100.
10
The following figure displays the stock performance over the
previous five years.
10
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.html
23
Source: Yahoo Finance
This shows a return of approximately 124% over five years and approximately 52% over the past
three years. This is compared to a biotechnology performance index called ARCA of which Vertex makes
up 3% of the composite.
This shows an approximately 126% five-year return and approximately 13% return over the previous three.
This puts the Vertex stock on par with the industry as a whole and shows that it is now greatly outperforming
(39% better). This is attributable to having three approved products on the market, two of which were
approved in those previous three years from 2015 to 2018.
b. Discounted Cash Flow (DCF) Model
The first valuation method discussed is the discounted cash flow model (DCF) net present
value approach. Here the cash flows of a project are projected for the entire time that it runs and
discounted back at some discount rate (r), that accounts for the time value of money and risk of
the project. This method is fairly straight-forward and easy for managers to implement. They must
simply estimate the investment required, market size, segment size and price to determine future
24
cash flows. All uncertainty or risk related to the project is assumed to be picked up by the discount
rate. However, this is unwieldy in pharmaceuticals/biotech because of the extremely long
investment horizons (7-15 years to develop a drug) and the high risk of technical or commercial
failure.
1112
ENPV methods only consider risk and managerial flexibility as assumptions based on
the probability of technical success or failure in the drug development process. In real portfolio
management decisions, there is a managerial option to abandon a project which is discussed in the
next section.
c. Real Option Valuation (ROV)
Real options are investment projects that have the option to abandon or continue a project
based on the progress and economic conditions around it. This flexibility negates much risk of a
bad investment because firms can cut their losses once there is evidence that it may not be worth
it to pursue further development of the project. This is much closer to a drug development project
where, for example, poor safety data on patients testing the drug in Phase II development stage
could cause the management to abandon the project and divert resources towards other more
promising candidates.
11
(Park & Shin, 2018)
12
(Willigers, & Hansen, 2008)
25
Binomial lattice representing real options, Source: Shin & Park, (2018)
The ROV method has been a standard in pharmaceutical valuation as it is still relatively
accessible to analyze from a manager’s point of view and still incorporates many of the important
conditions surrounding the success or lack thereof of a new drug launch. The technique developed
by scholars is a binomial lattice as presented in the above figure. The model accounts for upwards
and downwards trends at each decision node with a certain probability assigned for each state. If
a project’s net value is negative along a given path, it is typically abandoned. The estimated value
of the project will be higher compared to the DCF model because of the flexibility to adjust based
on incoming data is a benefit to the cash flows. The sources of uncertainty accounted for are both
technical and market risks. This ROV method has been used in many valuations over the last few
decades and further modifications to it have been developed such as risk-adjusted Net Present
Value (rNPV) which uses probability factors to determine the expected value of the project.
However, this model has limitations in that it is unable to consider unforeseen or unmeasurable
uncertainties.
26
d. Monte Carlo Simulation
To address the concern that all options, known and unknown, along a proposed project path
are addressed, several studies propose a Monte Carlo Simulation (MCS). This is a stochastic
process model that is able to accept a range and distribution of input variables, run thousands of
‘scenarios’ driven by some volatility factor(s) to return a mean and distribution of expected
outcomes. Willigers et. al and Park & Shin offer the technical understanding about the various
methods that overlay the theory of ROV with the more robust MCS models and how they differ
from the standard model using common index data and a composite of pharmaceutical data. Park
& Shin suggest that the regime changing (MRBL-MRS) model is the best because it accurately
represents the effect of mean reversion over the lifecycle of a product. Additionally, it claims to
consider the effects of regime change (of government) with different preferences for the regulation
of the drug development industry.
This technique works well, however, it is only practical with the perspective of an R&D
Portfolio manager. For these folks, their primary concern is to deliver economic returns on the
R&D investment spread and optimize it for the most promising candidates. In contrast, investors
should look to use the simpler GBM or Mean-Reversion (MRP) instance of the Monte Carlo
technique. This considers only one or two volatility factors respectively and is much more practical
for the investor to build, but still robust enough to show accurate projections. This type of analysis
allows for inputting a fairly wide range around the base assumption where then the model can pick
up that variance in outcomes.
27
XI. Valuation
The following presents an application of the aforementioned valuation techniques to
estimate a share price for Vertex. It does so in three parts, the first being a pro-forma projection of
the current company, the second a DCF valuation of SYMDEKO® and lastly an applied Monte
Carlo Simulation to the furthest developed pipeline product. These are all considered together as
the value of Vertex.
a. Capital Structure & Financing
The Vertex capital structure is financed by 53% equity and 43% debt. In the biopharmaceutical
industry, financing the large and continuous R&D expenditures needed for new molecule discovery is
critical to success. There is a constant search for new investors and unique licensing agreements with a
range of various stakeholders including academic research institutions, CROs, big pharma, and other peer
biotechnology firms. The types of licensing deals that arise are often complex and unique to each product
as is the case with Vertex. Some deals only license the commercial rights to a drug in certain countries or
regions where a partner company may already have a well-developed commercial sales team in that
particular therapeutic area. Still others are built on milestone payments where each round of investment is
predicated on advancement through the development pipeline.
b. Discount Rate
The discount rate is used to calculate the present value of future cash flows. It is also a measure of
risk of a project. The discount rate used in the valuation of Vertex is calculated by the Weighted Average
Cost of Capital (WACC) which is the discount rate of the firm. It is derived by the CAPM method which
accounts for the exposure to the systematic and unsystematic risk of the firm. The firmwide WACC is used
to evaluate the future cash flow projections from Vertex’s cystic fibrosis projects because those projects
are the same business of the firm itself and have an almost exact riskiness as the operations of the firm. The
28
calculations for this value can be found ‘FCF Valuation’ tab in the attached Exhibit which gives 11.82% as
the yearly WACC.
c. Pro-Forma Projection, FCF Valuation
The pro-forma model is found in the complementary Excel spreadsheet in the ‘Pro-Forma’
tab. In it, there is previous five years of quarterly financial data given as inputs in blue. All black
colored values are formulas or calculations. It projects out the next 20 quarters using the
assumptions in red at the top. These assumptions were built from historical average rates, expected
future trends, and analyst reports. These projections are then brought to the ‘FCF Valuation’ tab
where the actual cash flows to the share-holders are built. A terminal value is estimated by
assuming a terminal value growth rate of 2.75% per quarter. The formula for a perpetuity is then
used to calculate a terminal value that theoretically includes all of the firm’s future cash flows
beyond the projection period. This estimate is reasonable as it is significantly less than the current
high-growth rate of 9.66% per quarter and in my opinion can be sustained given the high rate of
investment into R&D that should keep Vertex with at least some product revenue growth going
forward. However, it is difficult to pin down an exact value of the terminal growth rate without
knowing something about the future state of the company which in biopharma is of course, highly
uncertain. Because the terminal value represents such a large portion of a firm’s total value
(assuming it will continue operating indefinitely) it is extremely sensitive to the growth rate. To
help with this problem, a data table of sensitivities is displayed further down on the ‘FCF
Valuation’ tab. This shows a range of discount rates and various terminal growth rates and which
combinations lead to an implied share price greater than the market price (in green) and which are
lower (in red).
29
All of these projected cash flows and the terminal value are then discounted and summed
to arrive at an estimated value of Vertex’s current company.
d. SYMDEKO® Valuation
The recently approved SYMDEKO® has now been approved and is valued according to a
DCF because the market risk is low and technical risk has already been surpassed because it was
able to advance through the development process. It showed superior efficacy and safety profiles
in comparison to other treatments in the clinic. Careful consideration is given to cannibalization
effects for the projections of future revenues of KALYDECO® some of which will be taken by
SYMDEKO®. Attention is also given to the patent timeline and competitors who have treatments
in the development process, which if approved, would disrupt Vertex’s current monopoly and
potentially create a large loss of revenues compared to the projections. The main factors are all
built into the model and presented on the ‘SYMDEKO’ tab in the Exhibit. Launch costs are
assumed to be similar to those of the previous products at around $200 million. The net price
assumes that 30% of the sale price is used for manufacturing. The total theoretical population value
comes from research commenting on how many previously untreatable patients are expected to be
treated with SYMDEKO®. Also, it includes the number that may switch from another product to
SYMDEKO® for the reduced side-effects and better efficacy. The accessible population rate of
85% assumes that there is some level of underinsurance where patients are unable to gain access
to the drug. This is defended by the slower than expected reimbursement coverage for
ORKAMBI® in certain EU countries like France where Vertex has been selling the drug but have
not recorded any revenues due to broken negotiations over the price that the French government
will accept. The uptake trend figures follow that of the previously launched drugs as well. The
30
total NPV of this product according to the assumptions made here is $5.69 Billion. This is
extremely significant for the company and signals that if adoption goes as planned this will be yet
another blockbuster product for Vertex.
e. Triple Combination Therapy Valuation, Application of Monte Carlo Simulation
This analysis uses the MCS-GBM (standard Monte Carlo) model to evaluate the triple
combination therapy based on assumptions regarding price, penetration (especially access in the
EU), longevity, success at stage of development, and approval.
The assumption for the cumulative probability of positive Phase 3 clinical data and the rate
of NDA approval (if submitted) is taken from Dimasi et. al and Hay et. al and then adjusted
upwards by 10% to 69% in order to account for this specific treatment’s status as combination
therapy in which two of the underlying drugs have already been approved. This gives stronger
inclination for the regulatory authorities to approve this therapy.
1314
Only between 10-25% of
drugs ever achieve cash flows past the pre-registration phase (and hence are never positive NPV
and should be rejected as projects).
15
However, this triple combination therapy has already
surpassed the riskiest parts of the drug development process.
Anthony Walker from the consulting group, Alacrita, suggests a using risk-profiled NPV
(rpNPV) to value pipeline products which as described in his paper is the most accurate to reality,
especially when run with stringent constraints. That type of analysis generates a tri-modal
distribution showing a large probability of loss, medium probability of breakeven and the very low
13
(DiMasi, J.A et al, 2010)
14
(Hay et al, 2014)
15
(Walker et al, 2015)
31
probability of winning big. This is the preferred method to view an early stage pipeline product,
however, in this case, it is unnecessary to analyze the triple-combination therapy in this way due
to it already beginning Phase 3 trials.
Instead, a simpler Monte Carlo simulation similar to the one his paper first presents was
performed with 50,000 trials. This is far more practical for the development stage that the drug us
in. The assumptions for this projection are presented on the ‘Triple-Combo’ tab in the Exhibit.
These assumptions were built off of research, analyst reports and values achieved by the previously
launched products. The input distribution ranges are also presented in the Exhibit with most
following a PERT distribution which allows for entering a smallest, largest and likeliest value and
is a smoothed form of a triangular distribution. The simulation returned a mean NPV of about $6.6
Billion.
f. Results
The entire outcome distribution and the associated statistics are presented in the following
figures:
32
Frequency Distribution of rNPV at 90% Confidence Interval, Source: Own Creation
Summary Statistics of MC Simulation, Source: Own Creation
33
The chart labeled sensitivity, also known as a Tornado chart, shows which input variables
explain which portion of the variation in the outcomes. As seen here, cumulative Market Share,
Accessible Population and Net Price are the most important factors in the determination of NPV
for the new product. This reinforces the recommendations derived from the business analysis
frameworks presented in Analysis I; Minimization of effects from competition, Market Access and
Pricing. The implementation of those strategies does much to reduce the variability around the
inputs and thus gives a more certain and often larger return.
34
XII. Target Stock Price
The implied stock price in this model is calculated by summing the three discounted cash flows of
the firm and subtracting the value of debt and adding cash. Then this is divided by the number of shares
outstanding to get an implied share price. As previously stated, the enterprise value here involves the sum
of the projected five years, the terminal value, and the two pipeline products covered in this analysis. The
total results are summarized in the table on the following page. The implied share price in the base case
scenario (all assumptions as given) is $171.94. This represents a 6.82% increase over the current market
share price of $161.89 (as of day close April 12, 2018). The section labeled ‘Monte Carlo Mean’ uses the
mean value from the MCS of the triple-combination product in the calculations. This gives a similar result
of 6.34% greater.
The sections labeled ‘Monte Carlo Low’ and ‘Monte Carlo High’ repeat the same calculations
instead using the low and high values of the 90% confidence interval around the mean of the simulation
distribution. In the low scenario the implied price is 3.86% higher and 9.00% higher for the high scenario.
35
Projected
Price &
Return
Base Case
Monte Carlo
Mean
Monte Carlo
Low (90% CI)
Monte Carlo
High (90% CI)
Net Present
Value of
Projected
Cash Flow
31189
31189
31189
31189
Triple
Combination
(Mean)
6861
6664
5642
7756
SYMDEKO
5695
5695
5695
5695
WACC
(Quarterly)
2.9547%
2.9547%
2.9547%
2.9547%
Terminal
Value Growth
Rate
2.75%
2.75%
2.75%
2.75%
Enterprise
Value
43745
43548
42526
44640
Less: Net
Debt
1503.71
1503.71
1503.71
1503.71
Plus: Cash
& Equivalents
1665.41
1665.41
1665.41
1665.41
Market
Capitalization
43907
43709
42688
44802
Shares
Outstanding
253.89
253.89
253.89
253.89
Implied Share
Price
$ 172.94
$ 172.16
$ 168.13
$ 176.46
Current Share
Price
$ 161.89
$ 161.89
$ 161.89
$ 161.89
Return
6.82%
6.34%
3.86%
9.00%
36
a. Investment Recommendation
Vertex has extremely strong market potential and is a hot stock to trade due to the strong status of
these future projections. It is even more compelling because as the cash flows from revenue increase the
financial standing of the firm increases and they can afford to either pay it out as dividends to shareholders
or reinvest in new projects. Based on this analysis, I recommend VRTX as a buy. I would upgrade this
recommendation to a strong buy if the Phase 3 data from the Triple-combination therapy starts coming back
positively. It is possible that this product will show more efficacy than thought and increase its value.
XIII. Limitations
This model has limitations in several areas. Mostly, these are in the assumptions being made based
on historical rates. There is no indication that historical trends will continue into the future, so the model
must make a defendable assumption and either use that value or update it according to new research or
trends. Secondly, the estimates for the discount rate and terminal growth rate are very sensitive and small
adjustments to these dramatically change the price. As part of this, it was assumed that Vertex would keep
almost the same capital structure where they are financing with around 40% debt, however, this value could
change in the future as the company may seek to lever up to benefit from interest tax shields now that they
are paying taxes due to positive net incomes for the first time. Thirdly, the projections for SYMDEKO®
were assumed to be true for simplicity, but a deeper analysis would start to look at initial data of product
sales and estimate the actual level of uptake in each year as well as looking at sensitivities around those
input variables. Lastly, there is a slight limitation in the Monte Carlo Simulation in that it may not fully
account for the true variability in inputs because they were made based on assumptions of the previous drug
launch, ORKAMBI®. It also does not account for extremely adverse events that are outliers, but in a real
scenario could drastically affect the projected NPV value.
37
XIV. Future Considerations
If Vertex is able to successfully bring SYMDEKO® and the Triple-Combination therapy to market
as well as grow the existing ones they will have a large inflow of cash. This causes them to be a great
candidate for making a strategic acquisition given the need to also de-risk away from only CF. The firm
currently has a partnership with CRISPR Therapeutics which has a gene editing platform that would cure
genetic diseases by splicing out pieces of mutated DNA and replacing it with the correct sequence so that
the cells grow, and the individual is healthy. Vertex is looking to treat sickle cell disease and Beta-
Thalassemia with this which are both blood diseases caused by mutated proteins. As such, they may look
to make an acquisition of IP or expert research groups in this space. It is interesting to note that sickle cell
disease is primarily found people of Sub-Saharan African descent in comparison with CF which is primarily
Caucasian. This would serve not only to diversify the products, but also open up to new areas of financing
or advocacy groups with a particular interest in investing funds to help people of African descent.
Maybe an even better target would be to go after another disease in an organ, like the kidney. On
the Vertex partnerships page, they mention they are seeking potential collaborators to perform research on
Polycystic Kidney Disease (PCD). From initial research, this target seems to have the same type of mutation
leading to a defective protein as does CF. Both of these disease targets fit with the Vertex strategy. The
beauty of their business model is in focusing on ‘rare’ disease that sell themselves thus reducing sales force
expenditures, gain high-reimbursement prices because the individuals are so extremely sick, and require
little capital expenditure to produce. All that is needed is R&D spending which is their specialty given the
history as a research focused organization. The unique financing model of accepting funds from an
advocacy group is risky in that you may be pressured to research only in one particular area even against
the better judgement of the firm as a whole, but the terms are likely to very favorable with little interest on
debt and only paying milestones in the pipeline advances. It is yet to be seen if Vertex will try this model
again or if other firms may follow their example.
Vertex themselves could also be a candidate for acquisition by a large pharmaceutical. The
acquiring company may want to purchase the significant CF assets that Vertex has and would likely pay a
38
premium for the company. This value would be based on the expected price of Vertex, plus any additional
value of synergies that the acquiring company would receive. However, this may not be the best option
because of Vertex’s unique culture there may be difficulties integrating with a parent company. Part of the
Vertex identity is the ability to have autonomy and work on developing truly innovative medicine.
In all, the company should seek to continue to provide access for eligible individuals that can
benefit from their life-altering products. The focus for companies to succeed in modern times is to adhere
to a triple-bottom line philosophy where returns are measured not only in economic profits, but in social
and environmental gains as well. A strong biotech such as Vertex has a tremendous opportunity to operate
in such a manner because they are bettering the lives of chronically ill people and their families.
39
XV. Acknowledgements
This project has been an amazing learning experience and test of mental and physical fortitude. It
was made much easier with the help of my primary reader, Dan Bergstresser and the insightful advice of
my secondary reader, Bhoomija Ranjan. Also, thank you to Hagit Weihs for guiding the project to its
completion.
I would like to thank the following individuals as well for their assistance on this project:
Matt Gall, Director of Business Development – Sarepta Therapeutics
Professor Mike McKay, Senior Lecturer – Brandeis International Business School
Anthony Walker, Founder/Managing Principal – Alacrita Consulting
Ben Gomes-Casseres, Professor – Brandeis International Business School
Aldo Musacchio, Associate Professor of Business – Brandeis International Business School
Davide Pettenuzzo, Assistant Professor of Economics – Brandeis University
Hamza Abdurezak, Professor of Finance – Brandeis International Business School
40
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Supplementary resource (1)

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