On July 25, an asteroid around the size of a dozen loaded container ships came within 45,000 miles of your head and you didn't even know it. If it had arrived 40 minutes earlier, the giant space rock would have appeared in the sky and slammed into us long before anyone would have had a chance to call Bruce Willis.

NASA didn't realize how close to a major catastrophe we were until a few days after the danger had passed. Unlike NASA, Vertex Pharmaceuticals (VRTX -0.39%) can see an asteroid heading toward its cystic fibrosis franchise from at least a few years away. The first group of patients to try a potential new treatment from Translate Bio (TBIO) recently completed a single-dose study, and the results are compelling.

Asteroid heading towards earth.

Image source: Getty Images.

It isn't time for Vertex investors to start building underground bunkers, but they'll want to keep both eyes on the incoming competition. Here's why.

Being lonely at the top is great for shareholders

Coaxing misshapen cystic fibrosis transmembrane conductance regulator (CFTR) proteins to do their job properly, using small-molecule drugs, seemed impossible before Vertex made it happen -- and it isn't getting any easier. The company's first cystic fibrosis drug, Kalydeco, earned FDA approval in 2012, and Vertex still doesn't have any potential competition on its tail.

Vertex's CF monopoly has given the company enough pricing power to drive product revenues up to an annualized $3.8 billion. As a result, the company was able to generate $1.26 billion in free cash flow over the past year while spending $1.45 billion researching and developing new drugs. 

There are only around 75,000 CF patients in the U.S., EU, and Australia combined, and an application for a triplet-combination is in front of the FDA at the moment. That's probably enough to keep Vertex's top line climbing for a long time, unless a viable competitor in this limited space forces Vertex to cut prices.

Three scientists discussing the contents of a test tube.

Image source: Getty Images.

Something different

While Vertex's pills give problematic CFTR a helping hand, MRT5005 from Translate Bio is an inhaled delivery system for messenger RNA (mRNA) transcribed from a functioning CFTR gene. In theory, Translate's candidate should allow lung cells to produce functional CFTR on their own, and results from the first dozen patients tested in a phase 1 study suggest it's on the right track.

Three patients given an 8 mg dose didn't experience a measurable benefit, but the three patients who received 16 mg demonstrated forced expiration strength gains that peaked at 11.1%, 13.6%, and 22.2% above their baseline scores. On the same yardstick, the placebo group averaged just 3.2% higher.

Reasons to remain calm

Analysts were quick to point out that patients treated with a larger, 24 mg dose exhibited a much smaller benefit. The lack of a dose-dependant response is troubling, because it could mean the benefit observed in the 16 mg group was a fluke.

Also, we know that getting strands of genetic material into target cells is relatively easy compared with getting those cells to do something with it. One possible reason for the lack of a dose-dependant response could be lung cells that become oversaturated with toxic levels of mRNA they can't use.

Vertex investors can also find some comfort knowing how difficult it is to treat CF in the first place. Years ago, an RNA antisense candidate from ProQR that looked promising very early on failed to impress anyone during a larger trial. More recently, an oral triplet combination from Proteostasis failed to progress past early-stage clinical trials, in spite of reporting promising data in 2018.

If the results we saw from 16 mg of MRT5005 are as good as it gets, Vertex will have little to worry about. The observed improvements appear inferior to those currently supporting an application for Vertex's triplet combination therapy.

Scientist reading a complex report.

Image source: Getty Images.

The numbers to beat

An application for Vertex's elexacaftor-containing triplet has already been submitted to the FDA. During its pivotal study, the average patient experienced a breathing improvement of 14.3% above baseline after 24 weeks.

Only one of three patients who received MRT5005 at 16 mg maxed out above the average for Vertex's triplet candidate. Translate Bio will alter the trial to include four patients treated with a single 12 mg dose and four more to be treated with 20 mg. Unless one of these new dosage increments outperforms the 16 mg group by a big margin, Vertex probably won't end up competing directly with Translate Bio for patients.

What's next

There are still around 7,500 CF patients with CFTR mutations that won't cooperate with any of Vertex's drugs. Since MRT5005 contains a complete set of instructions for CFTR, patients should respond regardless of what mutations they've inherited. 

Vertex investors want to look out for the new groups Translate Bio will test during the single-dose portion of MRT5005's ongoing study, the results of which will probably be ready to view early next year. Translate's also beginning a multiple-dose study with another 20 patients, which could read out before the end of 2020.

Even if all goes well for Translate Bio, it will be at least a couple of years before it can launch a competing CF therapy. That gives Vertex plenty of time to diversify a very concentrated revenue stream and avoid any major catastrophe.