Vertex hits new 52-week high on upgrade

AUG. 19 11:43 A.M. ET

Shares of Vertex Pharmaceuticals Inc. jumped over 15 percent and set a new 52-week high Friday following an upgrade from investment firm JPMorgan over growing confidence for its early stage experimental hepatitis C treatment.

Vertex shares rose $2.60, or 15.9 percent, to $18.97, surpassing a former 52-week high of $18.14, in morning trading on the Nasdaq. Its stock has climbed from a 52-week low of $8.61 in April and surged in May as Vertex began releasing data from its early stage hepatitis C clinical trial. Company shares are up nearly 80 percent on the year.

JPMorgan upgraded Vertex to "Overweight" from "Neutral" in anticipation of additional safety data on the company's hepatitis C treatment VX-950 in the second half of 2005 and the initiation of mid-stage clinical trials for the drug.

Analyst Richard Smith said he believes favorable results will be replicated in upcoming mid-stage trials, and said VX-950 could potentially reduce treatment times of hard-to-treat patients. In May, the company released data showing that VX-950 decreased levels of hepatitis C genetic material within 14 days and was well-tolerated by the 34 patients enrolled in the study. "Our upgrade to Overweight is based on our increased conviction that VX-950 will be a successful product and that it represents a blockbuster opportunity for the company and the rest of the pipeline represents merely further upside if successful," Smith told investors in a research note.

The analyst also presented comparative data in his note showing that VX-950 caused the largest reduction of hepatitis C genetic material in patients out of a class of nine other experimental treatments being developed by other companies. Smith estimates the hepatitis C treatment market is heating up and may reach more than $8 billion in 2010.

Smith maintained his forecast of a loss per share of $1.86 for 2005, and improved his 2006 projection to a loss of $1.89 from a loss of $1.92. Analysts surveyed by Thomson Financial expect the company to post a loss per share of $1.76 in 2005 and $1.75 in 2006.