Vertex Pharmaceuticals (Nasdaq: VRTX) is trading up 15% today after the company released positive phase 3 results for its cystic fibrosis drug, VX-770.

That's a major move. Vertex isn't some podunk drugmaker -- the 14% increase represents a $1.1 billion increase in Vertex's valuation. Investors think the drugless company is now worth nearly $9 billion.

Granted the data on VX-770 looks pretty good. Unlike other antibiotics like Novartis' (NYSE: NVS) Tobi or Gilead Sciences' (Nasdaq: GILD) Caysto, which just treat the symptoms of cystic fibrosis, VX-770 treats the underlying cause. The 10.5% improvement in lung function compared to placebo is pretty remarkable.

But the drug only works in a subset of patients that have a specific mutation that only occurs in 4% of cystic fibrosis patients in the U.S. I have a hard time seeing VX-770 hitting blockbuster status.

That leaves most of the $9 billion valuation to be carried by the company's hepatitis C drug, telaprevir. The drug is another game changer with the ability to drastically increase the cure rate compared to current hepatitis C drugs sold by Roche and Merck (NYSE: MRK) that only cure about half of the patients.

I don't want to root against Vertex; the company is a prototypical Motley Fool Rule Breaker, changing the treatment paradigm in multiple indications. But there are an awful lot of sales already priced into Vertex's valuation.

Vertex will get a decision from the Food and Drug Administration about its marketing application for telaprevir in May. I fully expect an approval, but there's no room for error at these prices. One false step in the approval process or sales ramp up for telaprevir or the second phase 3 trial for VX-770 and investors are going to punish the company.

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