NEW YORK (CNN/Money) - The stock price for Vertex Pharmaceuticals surged following an upgrade from J.P. Morgan on Friday, as the small drug maker moves ahead with testing on an experimental treatment for hepatitis C.

Vertex (up $2.43 to $18.80, Research) stock surged about 17 percent Friday on J.P. Morgan's upgrade to "outperform."

"Vertex is hot," said Andrew McDonald, analyst for ThinkEquity who initiated his coverage of the company with a "buy" rating on Aug. 10.

McDonald said he gave the company a favorable rating and a 52-week price target of $29 based "almost entirely on the prospects for VX-950."

"There's no question this is a potential blockbuster," said McDonald.

Vertex completed phase 1, the initial stage of testing, on VX-950, the experimental hepatitis C drug, and plans to begin phase 2, a wider stage of testing in humans, by the end of the year, said Vertex spokesman Zachry Barber.

Vertex CEO Joshua Boger said his company released "break-through" data on VX-950 in May, showing that during a two-week period the experimental drug lowered the presence of the virus in the blood by 25,000.

"It's an unprecedented result," said Boger. "Nothing else has been reported anywhere near this dramatic.

VX-950 is being tested as a protease inhibitor that kills proteins that allow viruses to reproduce.

If VX-950 successfully completes clinical trials and is approved by the Food and Drug Administration, McDonald projects the drug could reach sales of $700 million in 2010.

Schering-Plough is testing a hepatitis C treatment that could be a future competitor for VX-950. McDonald projects that Schering's (down $0.19 to $20.89, Research) hepatitis C product, if approved, would reach $1.6 billion in sales by 2010.

Based in Cambridge, Mass., Vertex is a relatively tiny drug maker with $32 million in second-quarter sales. The revenues come from two treatments for the HIV virus that the company is distributing with GlaxoSmithKline (down $0.08 to $48.21, Research).

McDonald does not own stock in the companies and ThinkEquity does not do business with them.