Vertex Pharmaceuticals (VRTX 0.20%) is the leader in cystic fibrosis (CF) treatment -- and it expects to hold that title until at least the late 2030s. There's a lot to love about the company's position and the resulting billions of dollars in annual revenue. Still, investors' main worry has been this: Can Vertex succeed beyond CF?
The biotech company may be about to prove that, yes, it can. Vertex CEO Reshma Kewalramani made a statement about one of the company's most innovative, exciting programs during the recent earnings call. And her words mean Vertex soon may have another billion-dollar therapy to sell.
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Work with CRISPR
Vertex is working on CTX001, a gene-editing therapy, with partner CRISPR Therapeutics (CRSP -1.98%) for blood disorders beta thalassemia and sickle cell disease. Beta thalassemia and sickle cell disease both hamper the ability of hemoglobin to deliver oxygen throughout the body. CTX001 involves the altering of a patient's stem cells to make a high level of fetal hemoglobin, an oxygen-carrying form of hemoglobin that we have at birth.
"Based on conversations [with regulators] to date, we believe regulatory submissions for approval of CTX001 may be possible in the next 18 to 24 months," CEO Kewalramani said during the earnings call last week.
If Vertex meets this goal, the company may have a new blockbuster on the market just a few years from now. The FDA has granted CTX001 fast-track designation. This speeds up the regulatory pathway for candidates that fill unmet needs. And the company is even doing pre-commercial work right now to prepare for an eventual launch.
CTX001 is a big deal for two reasons. First, it would offer Vertex a huge opportunity outside of CF. This would prove that Vertex can indeed make a name for itself in a different disease area. And it would offer the company a revenue stream outside of CF.
A game-changer
And second, the therapy itself could be a game-changer. A cure currently doesn't exist for beta thalassemia and sickle cell disease. Instead, doctors manage them through blood transfusions. Still, both disorders can significantly reduce lifespan. Vertex and CRISPR are studying CTX001 as a "potential one-time curative therapy" in two phase 1/2 trials.
The companies have so far dosed 30 patients and will share more data at medical meetings this year. They reported promising results back in December in the first 10 patients to be treated. In beta thalassemia, all patients were transfusion independent after three to 18 months of follow up. In sickle cell, the patients were free of acute pain crises after three to 15 months of follow-up.
Vertex recently showed a big sign of confidence in the CTX001 program. The biotech company increased its stake in the partnership. Vertex offered CRISPR $900 million up front and will add on a $200 million milestone payment if the candidate wins approval. In exchange, Vertex gets a 10% increase in potential profits. Vertex now is responsible for 60% of program costs and will keep 60% of profits.
Revenue prospects
So, what does CTX001 mean in terms of revenue? Vertex and CRISPR haven't said how much they would charge for the therapy. But we can look at pricing of gene therapy treatments as a guide.
Vertex and CRISPR use gene editing -- that involves correcting or replacing a faulty gene. Its close cousin -- gene therapy -- involves adding a healthy gene without removing the mutated one. Gene therapy treatments often price in the millions. For example, bluebird bio launched its gene therapy treatment for beta thalassemia two years ago with a $1.8 million price tag.
Vertex said in its earnings call that 32,000 patients in the U.S. and Europe have severe disease and could benefit from its potential therapy. Even if Vertex charged half of what bluebird charges for its product, we're talking about several billions of dollars in revenue. And Vertex said the size of the treatment group could expand "significantly" with easier pre-treatment regimens in the future.
Of course, Vertex and CRISPR still have hurdles to cross. They'll have to show the promising performance noted so far applies to more and more patients. They will have to convince regulators of the treatment's safety and efficacy. And if CTX001 gains approval, they'll have to win over payers.
But the CTX001 program is on the right track for now. So, it's reasonable to be optimistic about Vertex's future -- right alongside the CEO.
