Vertex Pharmaceuticals (VRTX -0.06%) has been generating billion-dollar revenue for years, thanks to its portfolio of cystic fibrosis (CF) drugs. In fact, Vertex is the global leader in CF treatment and likely to hang onto that position for quite some time. But soon, the company may expand into a completely different area -- and that potential product could become a blockbuster.
The biotech giant and partner CRISPR Therapeutics (CRSP 0.34%) aim to bring exa-cel, a gene editing treatment for blood disorders, to market. The companies just took one key step closer to their goal: They completed exa-cel's U.S. regulatory submission.
Does this mean now is a good time to buy Vertex shares? Let's find out.
Dominating the cystic fibrosis market
First, a little background on Vertex. As mentioned, the company dominates the CF market. Last year, it brought in $8.9 billion in product revenue. And the company reported $3.3 billion in profit.
Over time, Vertex's CF drugs have led earnings higher. The stock has generally gained over time, too.
But the thing that has investors worried is that Vertex is present in only one treatment area. That's weighed on the stock's performance at certain moments.
Meanwhile, Vertex has been hard at work addressing this issue. The company is bringing several other programs through the pipeline, including candidates for type 1 diabetes and pain management.
The closest to market, though, is exa-cel for the treatment of sickle cell disease and beta thalassemia. This potential product could be a game changer -- and eventually generate blockbuster revenue because, today, treatment options are limited for these blood disorders. Patients are faced with blood transfusions and many hospital stays throughout their lifetimes just to manage these illnesses.
Exa-cel could change all of that. It's designed as a one-time curative treatment. Right now, the companies are requesting approval for the use of exa-cel in adults but the're testing the candidate in phase 3 trials in children, too. This could greatly expand the potential patient population over time.
Vertex and CRISPR have asked the U.S. Food and Drug Administration (FDA) for priority review. If the FDA agrees to that, an approval decision could come as early as this year. The companies completed their submissions to European and U.K. regulatory agencies late last year -- so a potential worldwide launch could be right around the corner.
The supply chain is ready
As for rollout of the treatment, that should happen quickly. Vertex has set up the manufacturing infrastructure and the supply chain to support the launch -- and continue supplying exa-cel beyond that point. The company will initially target the 32,000 people in the U.S. and Europe who suffer from the most severe forms of the blood disorders. And Vertex has established 50 authorized treatment centers in the U.S. and 25 in Europe.
Vertex hasn't yet set a price for exa-cel, but the cost of treatment in the U.S. for one sickle cell patient over a lifetime ranges from $4 million to $6 million. Even a new product priced at $2 million or $3 million could result in savings per patient.
As part of the agreement with CRISPR, Vertex has taken the lead in the development, manufacturing, and commercialization of exa-cel. This means Vertex covers 60% of the costs -- but also will take 60% of the profits. So if all goes smoothly, exa-cel could become a significant growth driver for Vertex.
Time to buy?
Does all of this mean it's time to buy shares of this big biotech? Vertex stock outperformed the general market last year, and after dropping throughout February, it's on the rise again.
This leaves Vertex trading at about 21 times forward earnings estimates. That seems like a reasonable price, considering the company's strength in CF and the whole new potential growth driver on the horizon.
Vertex is finding itself a step closer to launching a potential blockbuster. As a result, now may be a great time to buy the shares -- and benefit from this innovative biotech's growth over time.
