2. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
D.E. Shaw’s Stake Value: $224 million
Percentage of D.E. Shaw’s 13F Portfolio: 0.18%
Number of Hedge Fund Holders: 62
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a biotechnology firm headquartered in Boston, Massachusetts. It focuses on developing treatments for cystic fibrosis, kidney diseases, diabetes, and musculoskeletal pain.
D.E. Shaw owned 1.02 million Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) shares at the end of Q4 2021. These were worth $224 million on December 31 and represented 0.18% of the fund’s 13F investment portfolio value. Jim Simons’ Renaissance Technologies was Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)’s largest investor tracked by our database, owning a $357 million stake of 1.63 million shares.
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) brought in $2 billion in revenue and $3.37 in non-GAAP EPS for its Q4, a strong set of results that beat Wall Street estimates on both counts. Jefferies maintained a $275 price target for the company in March 2022, as it stated that its high growth, high margin business is nothing short of stellar.
Tweedy, Browne Company LLC mentioned Vertex in its fourth quarter 2021 investor letter. Here is what the fund said:
“Portfolio activity during the quarter was relatively modest, and mostly on the sell side, taking advantage of the market’s advance to trim or sell positions that were trading at or above our estimates of their underlying intrinsic values. In terms of newly established positions, there were only two, (including) Vertex Pharmaceutical, a US-based pharma company specializing in therapies for cystic fibrosis (Value Fund). Both of these companies at purchase were trading at substantial discounts from our estimates of their underlying intrinsic values, and, in our view, are financially strong and well positioned for future growth.
Vertex Pharmaceutical, which was purchased by the Tweedy, Browne Value Fund in mid-November 2021, is a biotechnology company that specializes in rare diseases/orphan drugs. The company’s current strength is in the treatment of cystic fibrosis, where its therapies are the gold standard of care globally. Analysts expect that Vertex will be able to maintain its dominant position in the treatment of this disease, which afflicts 83,000 people worldwide, largely due to the effectiveness of its therapies, the fact that patent expirations for its drugs are a long way off into the future (2030-2037), and the lack of effective competition. This affords Vertex pricing power for its drugs, as there are currently no good alternative therapies. Assuming the company receives complete international and pediatric approvals, Vertex’s portfolio of approved drugs would be eligible to treat 90% of the people who have this disease. Vertex’s therapies are also not one and done drugs, but rather start in early childhood and continue throughout the patient’s lifetime. The company’s strong cash flow, in our view, should support the company’s development of even better next generation drugs to treat cystic fibrosis as well as diversify its drug pipeline to treat other rare diseases. However, many of these treatments are on the horizon or are in their incipient stages of development.”
