On Tuesday's MarketFoolery, host Mark Reeth, along with Million Dollar Portfolio analyst Michael Olsen, and Motley Fool One analyst Morgan Housel, discuss Vertex's (VRTX -0.51%) recent jump.
After two cystic fibrosis trials finished with strong results, Vertex's stock jumped over 40% today. Mark wonders what the pop means for Vertex and whether the stock can move even further. Michael explains that the drugs are considered "orphan drugs," as they currently don't have any competition and are specialized. Furthermore, he notes that the drugs basically have a license to price. For this particular market, Michael suggests that investors have to be part scientists and part investors, because of the challenges associated with drug trials. Morgan offers that the large market move indicates that expectations about the trial's results were unknown. Both Morgan and Michael agree that investing in these smaller biotech companies can be difficult and feel a bit like gambling.
