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MARKETS LIVE BLOG:

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Vertex Pharmaceuticals' 52-Week High Driven by Kalydeco

Zacks Equity Research

Shares of Vertex Pharmaceuticals Incorporated (VRTX) hit a 52-week high of $120.91 during the trading session on Nov 28 as the FDA action date for the label expansion of its lead product, Kalydeco, draws nearer. Vertex Pharma however closed the trading session at $117.88.

With around 59.7% of year-to-date return and a long-term expected earnings growth rate of 19%, this biotech stock seems to be an attractive pick for long-term investors. The average volume of shares traded over the last three months stands at over 1,417 K. Moreover, this Zacks Rank #3 (Hold) company has clocked a year-over-year return of more than 70%.

Growth Drivers

Vertex Pharma’s share price has moved up 12.5% ever since the company announced that the FDA’s Pulmonary Allergy Drugs Advisory Committee (:PADAC) voted in favor of the approval of Kalydeco in cystic fibrosis (CF) patients (6 years of age and older) with at least one copy of the R117H mutation. A final response from the FDA is expected by Dec 30, 2014.

The advisory committee's positive recommendation strengthens the chances of Kalydeco gaining approval in the additional indication. Although the FDA is not bound to follow its advisory committee's recommendation, it generally does so.

Kalydeco is currently approved for the treatment of CF patients (age≥ 6 years) with one of nine mutations (including G551D, G1244E, G1349D, G178R, G551S, S1251N, S1255P, S549N or S549R) in their CF gene. The company has been witnessing encouraging Kalydeco sales since its launch. In the first nine months of 2014, the product has generated sales of $339.4 million.

Moreover, the company has filed for Kalydeco in combination with lumacaftor for use in CF patients (≥12 years of age) who have two copies of the F508del mutation in the cystic fibrosis transmembrane conductance regulator (:CFTR) gene (read more: Vertex Pharmaceuticals Seeks Approval for CF Combination).

Further label expansions of the drug will boost sales and strengthen its position in the CF market.

Other Stocks to Consider

Some better-ranked biotech stocks include Biogen Idec (BIIB), Affymetrix Inc. (AFFX) and Cytokinetics (CYTK) – all three carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on VRTX
Read the Full Research Report on AFFX
Read the Full Research Report on BIIB
Read the Full Research Report on CYTK


Zacks Investment Research