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Could This Drug Become Vertex Pharmaceuticals' Next Blockbuster?

By Prosper Junior Bakiny – Nov 2, 2021 at 6:52AM

Key Points

  • Vertex Pharmaceuticals recently released data from an early-stage trial for a promising candidate.
  • The biotech's dominance in the cystic fibrosis market will continue for the foreseeable future.

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The company has a plan to move beyond its lucrative portfolio of drugs.

Vertex Pharmaceuticals (VRTX -0.46%) outperformed the broader market in the past decade. The drugmaker owes this performance to its monopoly in the market for medicines that treat the underlying causes of cystic fibrosis (CF), a rare genetic condition that harms a patient's internal organs.

However, as Vertex Pharmaceuticals has made headway into this patient population, some investors are increasingly worried about the company's post-CF plans. Fortunately, the biotech has several promising pipeline candidates, and it recently revealed some data from a clinical trial for one of them. Let's look closer at this potentially game-changing product Vertex Pharmaceuticals is currently working on. 

VRTX Chart
Data by YCharts.

Looking to shake up the diabetes market 

Vertex Pharmaceuticals is developing a stem cell-derived therapy for the treatment of type 1 diabetes (T1D) called VX-880. On Oct. 18, the company gave an update on the first patient dosed with VX-880 in a phase 1/2 clinical trial for the treatment. The patient in question received one infusion of VX-880 at half the target dose, along with medicines to control immune responses. The results, as estimated by various measures, were positive.

For instance, the patient's dependence on insulin injections decreased. Those with T1D generally need to take insulin daily. Only about 5% to 10% of diabetes patients suffer from T1D, according to the U.S. Centers for Disease Control and Prevention. But that still amounts to between 1.7 million to 3.4 million patients in the U.S. alone.

That's a massive patient population, and there are currently no therapy options that target the underlying causes of the condition. That's what Vertex Pharmaceuticals is aiming for with VX-880, and if it is successful, the company could have another blockbuster product on its hands.

Pharmacist giving a patient medicine.

Image source: Getty Images.

A bright future 

Naturally, this is only a phase 1/2 clinical trial -- and we only have data for one patient so far. So there is still a long road ahead for VX-880. Not to mention, Vertex Pharmaceuticals may have some competition in this market. In addition, other drugmakers are targeting T1D in various ways. For instance, Provention Bio is a biotech looking to develop a treatment to delay the onset of T1D. Provention Bio is much closer to launching its product teplizumab on the market, although it has encountered regulatory headwinds recently.

Still, the point is, even if VX-880 makes it to the market, Vertex Pharmaceuticals may have to compete with some of its peers in the T1D market. Even with this caveat, VX-880 would be a breakthrough for the company and for T1D patients, if approved. And while it's too early to bet on this project, it's just one more reason to consider adding shares of Vertex Pharmaceuticals to your portfolio.

The company still holds a monopoly on the market for CF drugs, and it isn't done benefiting from this tailwind just yet. Of the 83,000 patients in North America, Europe, and Australia with CF, roughly 50% are treated with one of Vertex's medicines. The company can target up to 90% of this population with its current lineup of drugs, and it estimates that more than 30,000 patients who could benefit from its regimen are not under treatment.

In other words, there remains significant room to grow for Vertex Pharmaceuticals' current lineup. And the company's most important product -- Trikafta, which can be prescribed to most patients with CF -- won't see its patent expire until the mid-2030s. Expect Trikafta to continue driving solid revenue and earnings increases for Vertex Pharmaceuticals. Further, the company boasts promising pipeline candidates not named VX-880.

The best of the bunch is CTX001, a gene-editing therapy for sickle cell disease and transfusion-dependent beta thalassemia -- two blood-related disorders with few treatment options. Vertex Pharma is developing CTX001 in collaboration with CRISPR Therapeutics; the two partners could submit an application to regulatory authorities within the next couple of years.

Lastly, with $6.71 billion in cash and cash equivalents as of June 30, Vertex Pharmaceuticals can always go shopping for other promising pipeline programs. In short, while VX-880 looks very promising, even if it fails to earn approval, Vertex Pharmaceuticals remains an excellent biotech stock to add to your portfolio.

Prosper Junior Bakiny owns shares of Provention Bio Inc and Vertex Pharmaceuticals. The Motley Fool owns shares of and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.

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