Vertex Pharmaceuticals (VRTX -0.06%) recently reported great news. It completed the submission of exa-cel, its treatment candidate for blood disorders, to the U.S. Food and Drug Administration (FDA). The company and partner CRISPR Therapeutics (CRSP 0.34%) wrapped up submissions to Europe and the U.K. late last year.
The companies aim for approval in adults suffering from beta thalassemia or sickle cell disease. Regulatory decisions could come as soon as this year. Vertex has already prepared the infrastructure to launch the treatment -- and it could become the company's next blockbuster. But things may get even better. Could a recent move by Vertex make the therapy bigger down the road?
Cutting-edge technology
First, a bit of detail about exa-cel. It's a gene-editing treatment using CRISPR Therapeutics' cutting-edge CRISPR/Cas9 technology. This involves cutting DNA in a particular spot and letting the natural repair process take over.
Here's how it's used for sickle cell and beta thalassemia. After the patients' own hematopoietic stem and progenitor cells are collected, these cells are edited with the CRISPR/Cas9 system. These edited cells, known as "exa-cel," are then infused back to the patient. But this stem cell transplant can only take place if the patient's body is prepared with a conditioning agent.
Today, this is done through a chemotherapy treatment that destroys the problem cells -- to basically start with a clean slate. The problem is the treatment, using chemotherapy drug busulfan, is aggressive. For example, in clinical trials, one patient had idiopathic pneumonia syndrome and another showed a low platelet count -- both events were linked to exa-cel and busulfan.
The conditioning process as it stands today may be too risky for certain patients. And that means some adults suffering from beta thalassemia or sickle cell disease may not be able to benefit from exa-cel.
But Vertex is working on something that could change that. The company recently signed a deal to license ImmunoGen's antibody-drug conjugate (ADC) technology. The idea is to develop new conditioning agents that may be easier on the body. ADCs are commonly used in cancer, to bring a cancer-killing agent directly to the right cells instead of harming other cells, too.
Three paths to market growth
If Vertex and CRISPR win the regulatory nod for exa-cel, they plan to focus on the 32,000 blood disorder patients in the U.S. and Europe who suffer from severe disease.
But Vertex's market opportunity could grow in three ways. First, if Vertex wins regulatory approval for exa-cel in children. The company is conducting phase 3 trials now. Second, if the company gains regulatory approval in countries beyond the U.S., the U.K., and Europe. And, finally, if Vertex's research with ImmunoGen's technology produces a gentler conditioning agent -- this could broaden exa-cel use to more fragile patients. In the U.S. alone, about 100,000 people have sickle cell disease.
So, why should patients and doctors flock to exa-cel right away, considering the difficult conditioning phase in place right now? Today, treatment options for beta thalassemia and sickle cell are limited -- and the diseases result in a lifetime of hospitalizations. Exa-cel is designed as a one-time curative treatment.
All of this means it's likely patients who can tolerate the conditioning treatment will be eager to give exa-cel a try. That could push exa-cel toward blockbuster revenue. And a potentially easier conditioning treatment down the road could broaden the therapy's audience -- and boost revenue further.
Time to buy?
What does this mean for you as an investor? It's important to look at the complete picture.
Vertex already brings in billions of dollars in earnings thanks to its cystic fibrosis (CF) portfolio. And it's likely to hold onto CF leadership for many years to come. At the same time, Vertex is expanding into other areas. And here, things are looking bright. Exa-cel is moving closer and closer to the finish line. Vertex also has exciting candidates in the pipeline to address areas of need like type 1 diabetes and pain.
The stock trades for 22 times forward earnings estimates right now. That seems reasonable considering the earnings track record, leadership in CF, and potential growth ahead. All of this makes Vertex a top biotech stock to add to your portfolio -- and hold onto for the long haul.
