The bear market crushed many top healthcare stocks -- from young high-growth players to long-established companies generating billions of dollars in earnings. But a few companies have managed to defy the difficult market, often due to a specific reason such as a potential product launch.
And that's exactly the case of biotech giants Vertex Pharmaceuticals (VRTX -0.76%) and Biogen (BIIB 0.23%). They climbed last year and are continuing gains so far this year. These companies already have a portfolio of products on the market. But there's something about the latest candidates waiting in the wings that has sparked investors' excitement.
1. Vertex Pharmaceuticals
Vertex is the worldwide leader in the cystic fibrosis (CF) treatment market. The company sells four CF drugs that generate billions of dollars in annual revenue. In fact, last year product revenue climbed 18% to more than $8.9 billion. Star product Trikafta, the company's newest CF drug, brought in $7.6 billion.
The biotech company is set to hold its market position until at least the late 2030s. And that's thanks to its innovation. The biggest threat to Trikafta is a Vertex candidate in phase 3 studies now. Vertex also is working with Moderna on a CF treatment that could address patients who can't be helped by current drugs.
But what really has everyone talking about Vertex today is the company's expansion into other disease areas -- and what soon may be its first product launch outside of CF. Vertex and partner CRISPR Therapeutics have completed regulatory submissions for exa-cel, a one-time curative treatment for blood disorders, in the U.K. and Europe. They're set to complete a submission in the U.S. this quarter.
If approved, exa-cel may represent another source of blockbuster revenue for Vertex. And this could be right around the corner. Potential approval and the revenue that follows might be catalysts for the stock. This means Vertex's days of market-beating share price performance are probably far from over.
2. Biogen
Biogen built its multiple sclerosis business into a billion-dollar valuation over the years. But it's now facing the same challenge as other well-established biotechs and pharma companies: generic or biosimilar competition. That's been weighing on product revenue at Biogen.
But Biogen is working to bring new blockbusters to market -- and its point of focus is Alzheimer's disease. The company's first attempt failed last year. The regulatory approval of Aduhelm was controversial, many doctors refused to prescribe it, and the Centers for Medicare & Medicaid Services (CMS) limited treatment reimbursement to those participating in a clinical trial.
The good news is Biogen and partner Eisai have recently won accelerated approval for Leqembi, a new Alzheimer's treatment. Like Aduhelm, Leqembi is a monoclonal antibody directed against amyloid beta buildup in the brain. Results from Leqembi's clinical trials, though, were more straightforward -- and the treatment met the primary endpoint and key secondary endpoints.
The companies are offering Leqembi for a significantly lower price than Aduhelm, and they're proceeding carefully with the product launch. They've filed for full, traditional approval as part of an effort to eventually gain CMS reimbursement. Today, CMS still only will reimburse this type of treatment for patients in clinical trials.
Biogen remains risky because it depends on Leqembi to trigger a new phase of growth. It may be a bit early to jump into this story right now. Still, news so far has been positive. This could keep Biogen's momentum going -- and a potential full approval may send the stock even higher over the long term.
