Vertex Raises $443M in Yet Another Monster Stock Sale

12/3/09Follow @xconomy

Investors apparently have an endless appetite for shares of Vertex Pharmaceuticals, so the company is taking advantage of this good fortune to raise another mountain of cash. The Cambridge, MA-based biotech said its latest stock sale this year has raised $443 million.

The company (NASDAQ: VRTX) fattened up its cash hoard by selling 11.5 million new shares of stock at $38.50 apiece, or about $1 cheaper than yesterday’s closing market price. The deal was underwritten by Goldman Sachs, Bank of America/Merrill Lynch, JP Morgan Securities, and Morgan Stanley. The underwriters are getting options to buy another 1.5 million shares at the same terms.

Vertex has been raising—and spending—huge sums of money this year to support experimental drugs that it hopes will establish new standards of care for a chronic liver infection, hepatitis C, and for a deadly lung disease, cystic fibrosis. Before the latest financing, Vertex raised $313 million from investors in February, another $105 million in July through an amended licensing deal for its hepatitis C drug in Japan, and in September, it pulled in another $155 million in debt financing tied to its European commercial prospects. Last month, it shed $109 million in debt by offering noteholders a chance to convert their holdings into stock.

Even after flooding the market with new shares through those deals this year, demand is still there: Vertex stock is still up about 30 percent since Jan. 1.

Vertex said it had $856 million in cash and investments on its books at the end of September in its most recent filing, so this financing means that it will have socked away well more than $1 billion. It will take a lot more investment to commercialize the Vertex drugs if they are approved for sale by regulators, but analysts say the potential payoffs will justify the expense. Demand for the Vertex drug for hepatitis C alone is expected to be huge, and it has a chance to exceed $2.6 billion in U.S. sales alone in 2013, according to a Cowen & Company estimate.

What is making investors so eager to pony up? It really takes some time and effort to understand the clinical trial results thus far for telaprevir for hepatitis C, and for VX-770 for cystic fibrosis. I won’t recap all of that for today’s financial story, but here are a couple of links to stories we’ve written this year explaining why researchers are so interested in the drugs for hepatitis C and cystic fibrosis.

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