Kelsey Tsai (Morningstar, VRTX)

Kelsey Tsai (Morningstar, VRTX) by The Financial Exchange

00:07:02

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

Let's go over to Kelsey side from Morningstar here do little stock talk with us Kelsey thank you for joining us. You'll see we're talking here about Vertex Pharmaceuticals this is a company that had a big run up a few well maybe about six weeks ago now. Largely on the back of some better than expected drug trials that were going on a question to you is are you bullish on the Mindy think there's still some room to wrong. Yes I mean enjoy I think crystal ball on them we model our hundred dollar per share and value estimate. Written out stocks trading a little bubble once that people that we don't think there's about a tenth of a side that stock. Despite the market jumped after the positive chip a combo resolved so. I'm beat Thomas triple concourse all their couple implications for comment though. One protection that unprecedented benefit and it's difficult to treat patient population and it kind of represents the next light is opportunity for the and in QL liquidity risk there there's. If it ever has artfully as well just because not only did they have one shot on net or cute I think that they have four shots on net. On late stage testing of all a lot of preclinical mop molecules. Looking at this company what's the greatest risk for them going forward. He had shared I guess the biggest risk would be that they're not able to capture is difficult to treat a patient population that. The data shows dom safety side effects or. I'm not graded out great at sixty in late stage testing the ring now. The stock rose on early stage results. On the immigrant in the event that it'll ask these three casting. Kitty kind of sort out. And the rest of their molecules now the rest of it lies let them it means. Developmental. Product and I see they're they could be this side effect it could be the act that could be concerned but the fact they have multiple candidates really kind of Ebert but that content. Company like this even though the pharmacy actors typically thought of as being relatively stable when he figured big pharma companies. Even though this is a forty billion dollar company if it still has some significant volatility correct. Yeah I cracked it especially in the past he's making. I expected and building up as the extent that this pipeline for awhile. But really now that it how the strip conflict in an has really been able to chat on the typical street patient population what's. About 30% of the the F patients. On at any able view on kind of reach more people I mean it's still a buyout pact is still some risk involved. But because they have a monopoly essentially on the is that I've let the market and has limited your turn competition and emitting into different states. It is Vertex potentially an acquisition target at this point are they too big. For someone to make a run at them. Yeah I get the airplane and that that our earth and that it could be a target. That that can like you mentioned it is that use. Market cap currently is could be difficult found that the current limit that. Competitions he some big Alpharma players. What did you was that your price target was on the company again. Yeah I are. Very good Kelsey thank you very much for the time. It's that is Kelsey side from Morningstar talk about Vertex Pharmaceuticals with the ticker VE RT acts I think of Vertex is being a fairly recent phenomena. You know only company that. Really gained fame and with the last ten years. It it seems to be believe it or not a lot of people don't realize just how long the path is for these pharma company's just to get started up. Vertex was founded in 19891. Hokies they've been around almost thirty years at this point. But you talk about when they finally started. It's a really get drugs moving through their pipeline. It was like 2002 or 2003. When they finally started getting things approved and so forth so for a lot of these start up the a buyer tax. It's fifteen years before you get something that's actually. Approved an out there when you're losing money that whole way that the people don't you are candies your literally you know the venture capital investors in that company. Are losing. Tens of millions of dollars per year betting on mr. They are an end Vertex finally got to the point that you remember they built that beautiful new building down on the South Boston waterfront about 163 or four years ago now. And we've not they've got about 18100 employees at this point. They're produced about one point five billion dollars in revenue at that right now so those are well paid employees folks those are may is are people making seven grand a year yup it's they they certainly and they put a ton of money into R&D at this point is well. They're spending. On an annual basis about a billion dollars a year on our NT and then you know when you think of R&D. It's technology but it's also those people off the scientists it's a tennis is at home of highly compensated employees. And that's part of the reason why you continue to see I think a lot of activity in Boston on the housing front as companies like this. They're the ones that are driving its year continuing to see a big push from these highly compensated employees in the housing market embossed. But you're also seeing people pushed back against the cost of drugs right so. Yet this simultaneous. Resistance. To high drug prices. And you kind of wonder. What that does. To a city like Boston in evening news and it's not just Boston anything about New Haven, Connecticut they're trying to build up there. The their their drug business as well what does that do if you if you all the sudden you get socialized medicine or single Payer and you know there's no appetite to pay a 100000 dollar for directory boy. It and that's the big question is you say you know we've talked an awful lot about how we appear to be on the verge of making some major strides against fighting things like cancer and and you sit there and you say how much would you pay. To save someone from camp because that that patient can't pay for their own treatment so it's how much will all of us collectively pay you know. If it's we're going to have some higher costs. And we need to figure out how to pay for because the technology is going to be there. Well people rebel against the drug cost night and then they get a load of what the you know the sour memory of the conversation about the tufts nurses and their bacon 130 grand younger. You were very. In favor of the tufts nurses date being paid more than a 130000 dollars a year but they Yassin elegy do you think that companies should be allowed to charge underground a year for drugs no. Ali that does take its eggs or so it just interesting how we compartmentalize like yeah well you know like as the nurse is your neighbor right. And the drug is. Chemical agent yeah and you don't think of that is being yuppies on the personnel working in a lab for ten years trying every single thing that he could think of until it finally figured out what was going well it's hard to appreciate the value of the drug or with what is that drug perhaps the that was also Boston based company and yeah I'm trying to cost like eighty grand yeah for treatments and all people resented that like crazy. Just we should be and now.
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