OPIM 5894 ADVANCED PROJECT MANAGEMENT VERTEX PHARMACEUTICALS CASE TEAM 1

Vertex Pharmaceuticals case  Which of the 4 project portfolio options currently facing Vertex do you favor? VX Big money - Earliest in development - Biggest risk Prof. Suresh Nair, University of Connecticut

Vertex Pharmaceuticals case  Specifically, which two projects would you advance in development? Why? Show analysis. VX-702, VX Highest expected values - See graphs Prof. Suresh Nair, University of Connecticut

Vertex Pharmaceuticals case Prof. Suresh Nair, University of Connecticut CriteriaVX-148VX-702VX-765VX-950 Sales Potential $4.6 B$6.0 B $7.5 B $4.8 B Financial Return $2.5 B$3.1 B $3.7 B $2.5 B Risk (Chance of Success)20%15% 22% 21% Time to market2H ‘07 1H ‘092H ‘08 2H ‘09 Wall Street Reaction LowMedium High Breadth of Potential ApplicationsLow HighMediumLow : : : :

Vertex Pharmaceuticals case  Would you license out the two others not chosen or keep them as backup? - VX-148 – license out - VX-950 – license out  How much should Vertex management rely on quantitative methodologies (such as real option valuation) versus more qualitative approaches? - Quantitative Methodologies – 75% - Qualitative Approaches – 25% Prof. Suresh Nair, University of Connecticut

Revenue Stream Prof. Suresh Nair, University of Connecticut