Vertex Pharmaceuticals Incorporated (VRTX): What You Need To Know

Page 1 of 2

What’s the source of your investment strategy? Many look to great investors like Warren Buffett for guidance on how to invest. Some take what we at the Fool call a “motley approach” and try a little bit of everything. Others really don’t have an investment strategy at all. They just throw their money at whatever looks good at the time.

Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)Here’s another angle: Learn from successful companies. In other words, see what made a given company do well in the market and find others that exhibit similar attributes. There are plenty of companies to choose from, but let’s see how this approach plays out with an example from the biotech world: Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). Here are three investment strategy lessons from Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)’s success.

1. Understand the market opportunity.
Even the best-run company in the world won’t produce stellar returns if it operates in a sector with lackluster sales potential. Before buying a stock, make sure you understand the market opportunity. Look at the realistic potential for sales and the strength of competitors. If all looks good, the stock can advance to your next stage of analysis.

For example, a key market targeted by Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is cystic fibrosis. The disease impacts around 30,000 Americans and has no cure. While treatments exist to address some symptoms, no drug targeted the defective protein at the root of cystic fibrosis — until Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) introduced Kalydeco.

Some analysts project that Kalydeco should reach annual sales of more than $1 billion within the next three years. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)’s other cystic fibrosis drugs in development could triple that amount.

Of course, developing a product for a market with great opportunity doesn’t guarantee success for your investment strategy. An estimated 1 million people die each year from complications related to hepatitis B. Dynavax Technologies Corporation (NASDAQ:DVAX) developed a hep-B vaccine, Heplisav, that showed tremendous promise. However, safety concerns derailed approval for the drug. While Heplisav might still reach the market, Dynavax Technologies Corporation (NASDAQ:DVAX)’s experience highlights the risks even in a market with solid potential.

2. Be patient.
Success doesn’t typically happen immediately. Investors usually must be patient and wait for good things to happen. Sometimes, that waiting means persevering through tough times.

Shareholders of Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) experienced this challenge in the fourth quarter of 2012. The stock plunged 34% starting in October after it reported clinical results for experimental cystic fibrosis drug VX-809 followed by disappointing quarterly sales numbers. However, any concerns were temporary. Patient investors can now claim gains of nearly 30% above the early October levels.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!