Making The Call: Vertex's Cystic Fibrosis Trials Will Succeed. Here's Why.

BOSTON (TheStreet) -- Adam, let's talk about Vertex Pharmaceuticals (VRTX) and the "TRAFFIC" and "TRANSPORT" phase III studies in cystic fibrosis.

You mean the biggest, baddest, most wild, stock-churning clinical trial event in 2014? Sure, let's talk about it. Vertex should be announcing results from these studies real soon. The official guidance is "mid year."

You expect Vertex shares to gyrate wildly based on the results from these studies?

Big time. I'm not so good at predicting stock movements with precision, but let's just say positive results from these two cystic fibrosis studies have the potential to propel Vertex over $100 per share, perhaps even double the market value of the company. If the studies fail, Vertex doesn't go to zero, but the stock could fall 25-50%. A lot depends on what the actual data from the studies look like. Vertex closed Wednesday at $67.15.

How does a single clinical trial event have such an outsized effect on a stock?

Because this is biotech -- big risks, big rewards and vice versa. For Vertex, the jackpot at the end of the TRAFFIC and TRANSPORT studies is $4-7 billion in peak revenue added to their existing cystic fibrosis franchise, with the potential to add billions more in sales in the future. I'm not joking, this is a huge clinical catalyst. Vertex could be the next Gilead Sciences (GILD).

Exciting! Help me understand the Vertex phase III studies better.

Okay. TRAFFIC and TRANSPORT carry identical designs. Each study enrolls 500 patients (1,000 total) with cystic fibrosis homozygous for the F508del mutation. This is the largest subgroup of cystic fibrosis patients (28,000-33,000 patients worldwide) so another reason why the studies are so important.

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