Biotech giant Vertex Pharmaceuticals (VRTX -0.32%) has outperformed the S&P 500 in the past three, five, and 10 years. That's not a fluke: The drugmaker has been highly successful financially while displaying its incredible innovative abilities. Thankfully, it's not too late to invest in Vertex even with the market-beating returns it has provided in recent years.
The company's underlying business remains as strong as ever -- strong enough that the stock is an excellent "forever" pick. Let's find out more.
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Vertex's excellent record
Experience matters in most sectors. The biotech industry is no different. That isn't just because it is difficult to navigate, given the myriad regulatory rules and guidelines that drugmakers must comply with all the time. Companies also need seasoned teams of researchers and scientists with a proven track record of developing innovative medicines. Vertex's experience in developing therapies for cystic fibrosis (CF), a rare disease of the lungs, gives it an incredible advantage over its competitors.
It currently markets the only drugs in the world that treat the underlying causes of this disease -- and Vertex is still innovating. Earlier this year, it reported positive data from a phase 3 clinical trial for its next-gen CF therapy, which should be an improvement over its current crown jewel, Trikafta. Meanwhile, competitors have yet to crack the code. Many have tried -- and failed -- to challenge Vertex in this area. Some are still trying. Krystal Biotech, a mid-cap company, is working on a gene therapy for CF that could treat all patients.
That's something even Vertex Pharmaceuticals hasn't been able to achieve. Its most important product yet, Trikafta, can treat about 90% of CF patients. Could Krystal Biotech mount a serious challenge against Vertex? Maybe, but if history is any guide, it's unlikely. Vertex Pharmaceuticals is also developing treatments targeting patients who aren't currently eligible for its treatments. And importantly, the biotech is expanding beyond CF.
The wheel keeps turning
How often can a biotech completely monopolize therapies that treat a disease for over 10 years? It's not that common, so Vertex Pharmaceuticals isn't betting on that happening again. The company is casting a wider net this time around. Its portfolio targets multiple therapeutic areas. Last year, Vertex earned approval for Casgevy, developed with CRISPR Therapeutics, a gene-editing treatment for two rare blood diseases.
That was the company's first non-CF approval in a long time. In January, it reported positive phase 3 results for its potential treatment for acute and neuropathic pain, VX548. The biotech could have more gems in development. Consider inaxaplin, a potential therapy for APOL1-mediated kidney disease. This candidate is in late-stage testing. There are no medicines that treat the underlying causes of APOL1-mediated kidney disease.
Its worldwide patient population tops 100,000 -- that's 8,000 more than the number of people with CF in geographies the biotech targets. Could Vertex reach the same level of success in this area? Maybe, but it is going after several similar targets to mitigate the risk of a single candidate not panning out.
Vertex Pharmaceuticals' approach has worked. Its results speak for themselves.
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Just as importantly, the biotech has created a culture centered around innovation. It boasts a robust pipeline, and its most recent launch, Casgevy, should far exceed blockbuster status. There is plenty to be excited about with Vertex Pharmaceuticals. Investors who purchase the company's shares today can still expect outsize returns over the long run.
