Vertex Pharmaceuticals (VRTX -0.76%) did something most other biotech companies didn't last year: It beat the bear market. The specialist in treatments for cystic fibrosis (CF) climbed as the three major indexes dipped into bear territory. And it finished the year with a 31% gain.
There was a clear reason for the enthusiasm. Vertex was on its way to proving it could be successful in areas beyond CF. The company had reported positive data for its blood-disorders candidate and then began regulatory submissions. So now, after last year's stellar share performance, the logical question is: Is it too late to buy Vertex shares? Let's find out.
Vertex's biggest moneymaker
First, let's look at Vertex's current earnings situation. The company sells four CF treatments; the latest one, Trikafta, is its biggest moneymaker. Trikafta brought in $5.6 billion in sales for the 2021 full year. That's 75% of Vertex's total product sales. These products helped Vertex report $2.3 billion in profit for the year.
But there's one thing investors have worried about: Vertex's presence in just one treatment area. Those worries have nearly evaporated in recent times, however, because the company has almost reached the finish line with exa-cel, its treatment candidate for the blood disorders sickle cell disease and beta thalassemia.
Vertex and partner CRISPR Therapeutics have submitted exa-cel for regulatory approval in the U.K. and Europe, and they expect to complete their U.S. submission in the coming weeks.
Exa-cel represents another blockbuster opportunity for Vertex because it's a one-time curative treatment, and today treatment options for sickle cell disease and beta thalassemia are limited.
This could result in a lot of interest from doctors and patients, and Vertex holds the rights to 60% of profits. If all goes smoothly during regulatory review, an exa-cel launch could be right around the corner.
But Vertex's expansion beyond CF and within CF doesn't end there. The company predicts five potential launches over the coming five years and "multiple" launches by 2030.
Those closest to market include a CF treatment candidate with the potential to beat Trikafta and an investigational treatment for a very common problem: pain. Both are in pivotal development.
Treating pain
Let's talk pain first. We've all experienced it, unfortunately. Our options are either over-the-counter pills such as acetaminophen or prescription opioids. The former often are ineffective and the latter have been linked to addiction.
Vertex is working on VX-548 to offer effective pain relief without addiction risk or major side effects. Success here could be a game changer for Vertex -- and the rest of us -- because pain affects just about everyone.
As for CF, Vertex's phase 3 candidate is given in one dose daily versus two doses for Trikafta. So it could make life a lot easier for patients. The company expects to complete the phase 3 studies this year.
Now let's look more closely at Vertex's share performance. Today, at about $290, it's close to its record high. But it's important to remember that so far, its product portfolio has been limited to CF. Right now, we're looking toward a future of additional CF treatments and ongoing leadership there, and potentially many new products in other treatment areas.
If Vertex can make this happen, the shares clearly could move higher from today's level. Especially since the stock trades for only 18 times forward earnings estimates. That's a steal based on the company's growth right now and its prospects. And that's why it's not too late to get in on this innovative biotech stock.
