Biotech giant Vertex Pharmaceuticals (VRTX) looks unstoppable. In the past six months, the company launched a brand-new and highly promising product on the market and delivered positive phase 3 results for exciting candidates.
The drugmaker isn’t stopping. Vertex is moving forward with another investigational medicine that could become a big deal somewhere down the road. Let’s find out what it is and what it could mean for investors.
Straight out of the playbook
First, let’s review how Vertex Pharmaceuticals has been so successful in the past decade. The biotech found a niche to focus most of its efforts on: a rare disease of the lungs called cystic fibrosis (CF). Before Vertex made breakthroughs in this area, no medicines addressed the underlying causes of CF. The drugmaker has developed several drugs, and it remains the only biotech company to do so. The company is still looking to launch medicines in areas with significant unmet needs.
One of Vertex’s current targets is APOL1-mediated kidney disease, a chronic kidney condition caused by mutations in the APOL-1 gene. Patients often don’t experience any symptoms until the advanced stages, when their kidneys are close to failing, at which point there will be signs such as proteinuria (excess protein in the urine), swelling of the feet, and high blood pressure.
Vertex Pharmaceuticals recently announced it was starting the phase 3 portion of its phase 2/3 clinical trial for its potential APOL-1 mediated kidney disease treatment, inaxaplin. This candidate delivered excellent results in the phase 2a portion of the study, including a statistically significant decrease in proteinuria. Based on data collected so far, Vertex plans on expanding the study to include patients as young as 10, something it had not planned on doing before.
An excellent forever stock
Vertex Pharmaceuticals estimates that 100,000 patients in the U.S. and Europe could benefit from inaxaplin. No approved medicine targets the underlying causes of APOL-1-mediated kidney disease. To put that in context, about 92,000 patients have CF in the geographies the biotech has targeted. In other words, if Vertex aces late-stage clinical trials with inaxaplin, it could be the start of a new dominant franchise every bit as successful as the company’s CF portfolio.
That said, Vertex’s prospects hardly depend on this lone candidate. Inaxaplin could flop in late-stage studies. Even if it doesn’t, perhaps other drugmakers will succeed in developing competing therapies. With competition in the field, Vertex Pharmaceuticals wouldn’t be as successful as it was within CF. Despite these risks to inaxaplin’s bid, Vertex remains an excellent biotech stock.
The company is still delivering revenue and earnings growth thanks to its most important product, Trikafta. Last year, Vertex Pharmaceuticals’ sales increased by 11% year over year to $9.87 billion, while its earnings per share grew by 8.3% to $13.89. Late last year, Vertex started earning approvals for Casgevy, a gene-editing therapy for a pair of rare diseases developed with CRISPR Therapeutics.
At a cost of $2.2 million per treatment course in the U.S., and with a patient population of 35,000 people in the various countries where it will launch Casgevy, Vertex Pharmaceuticals could make a fortune. Furthermore, the company reported positive phase 3 results for a treatment for acute pain, and for a next-gen CF therapy. Both could earn the nod from regulators within a year and strengthen Vertex Pharmaceuticals’ lineup.
Given that the company’s pipeline extends beyond inaxaplin, Vertex Pharmaceuticals should have a transformed lineup of approved medicines in the next five years. Early stage programs could pay off beyond this timeframe. Here’s the point: Vertex Pharmaceuticals is a highly innovative biotech that should continue delivering excellent clinical and regulatory progress, solid financial results, and market-beating returns.
Investors can safely park the stock in their portfolios for good.
— Prosper Junior Bakiny
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Source: The Motley Fool