Vertex cystic fibrosis revenue of $6-7 billion year is equal to what Gilead generates in revenue every year from is antiviral product sales, mostly its dominant HIV drugs.
Comparing Vertex to Gilead is very appropriate because their respective revenue streams are sticky, like an annuity delivered every year without fail. Think about it, a cystic fibrosis patient with the f508del mutation will start therapy on Vertex's VX-809 and Kalydeco as a child and will continue on therapy for their rest of their life. Vertex has no competition on the near horizon and its patents extend out to 2027.
This is exactly how Gilead grew to be a monster stock in biotech. Patients take Gilead's Truvada or Atripla to keep the virus in check and they continue taking these drugs day after day, year after year. If anything, Gilead's position is a bit more tenuous compared to Vertex because competitive HIV drugs from other companies exist and Gilead's patent position is weaker.
With Monday's big stock surge, Vertex carries a market cap of $11.5 billion, still well below Gilead even if you subtract the value attached to its recent push into hepatitis C.If you think comparing Vertex to Gilead isn't appropriate, then how about Alexion and its orphan disease drug Soliris, which is currently on a $1 billion sales run rate and growing like gangbusters. Alexion is a $17 billion company, but Vertex is only worth $11.5 billion? These market value comparisons are imprecise, granted, but you get the idea. Don't under-estimate the sheer size of Vertex's revenue potential in cystic fibrosis or its durability.
>To contact the writer of this article, click here: Adam Feuerstein. >To follow the writer on Twitter, go to http://twitter.com/adamfeuerstein. >To submit a news tip, send an email to: email@example.com. Follow TheStreet on Twitter and become a fan on Facebook.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV