3 Things About Vertex Pharmaceuticals That Smart Investors Know

Vertex Pharmaceuticals' (VRTX -0.06%) stock has climbed nearly 20% so far this year, and for good reason. The biotech company completed a regulatory submission for what may become its next blockbuster product. Vertex and partner CRISPR Therapeutics hope to launch exa-cel, a gene-editing treatment for blood disorders, as soon as next year.

This is a huge deal for Vertex because it would represent the company's first product outside of its cystic fibrosis (CF) specialty area. A few years ago, investors worried that Vertex would struggle to move beyond CF -- an approval here would prove that Vertex can successfully expand. So, it's no surprise that, in recent times, the market's focus has been on exa-cel. But there are three other things about Vertex that smart investors know. And that's why right now is a great time to get in on this big biotech company.

1. CF dominance is far from over

Vertex today brings in billions of dollars thanks to its portfolio of CF drugs, especially the newest one, Trikafta. Regulators approved Trikafta in 2019, and it was cause for excitement. That's because Trikafta has the potential to treat 90% of CF patients. Last year, the drug generated more than $7.6 billion in revenue.

But growth isn't set to stop with Trikafta. The company is testing a treatment in phase 3 trials that could be even better than that star product. And it may be more practical for patients. It's taken once daily versus Trikafta's twice-daily regimen.

Vertex also is working with Moderna on a potential treatment for the 5,000 CF patients who aren't candidates for the company's current products. In most cases of CF, patients' bodies make CFTR protein that doesn't function properly. But in this smaller group, patients don't produce any CFTR protein. Vertex and Moderna are developing an mRNA therapeutic that programs cells in the patients' lungs to produce functional CFTR protein. Success here could be a real breakthrough.

In recent years, Moderna has said its CF dominance should continue through at least the late 2030s. Considering these potential new products, that sounds accurate. And this means Vertex can count on CF for billion-dollar revenue for quite some time.

2. Vertex's pain candidate could be big

Today, if we're suffering from pain, our options to manage it are pretty limited. There are a handful of over-the-counter pills like aspirin or acetaminophen. And then there are the stronger opioid options -- in many cases, they work, but they're also linked to addiction and side effects. For that reason, healthcare providers are making efforts to limit the use of opioids.

Enter Vertex. The company is developing a non-opioid painkiller, and results so far show promise. Vertex is testing VX-548 in a phase 3 trial, and the company expects to complete studies later this year or early next year. Vertex is going for a moderate-to-severe acute pain label. This would allow for widespread use of the drug -- from in-hospital settings to at home.

This could represent a significant commercial opportunity due to the great need for alternatives to today's pain pills. The U.S. acute pain market is worth about $4 billion. And Vertex has the expertise to handle the market. Hospital prescribing accounts for more than two-thirds of pain treatment days. And Vertex plans to develop sales infrastructure to directly address these prescribers.

So this potential product could represent a significant growth driver for Vertex -- and soon.

3. Vertex is harnessing today's top technologies for growth

Vertex isn't just relying on its own technology for growth. The company also is incorporating the expertise of other top companies into the plan. As mentioned above, Vertex is working with Moderna -- and using the biotech's messenger RNA expertise -- in its CF program.

Vertex also is broadening its use of CRISPR's gene-editing technology. The advantage of gene editing is it allows for the development of potentially curative treatments. That's because it fixes the faulty genes involved in a particular disease process. So, the use of gene editing could lead to major breakthroughs.

Earlier this year, Vertex licensed CRISPR's gene-editing platform for use in its type 1 diabetes (T1D) program. The company plans on using the technology to develop cell therapies for T1D that won't be destroyed by the patient's immune system. It's clear Vertex is putting a big focus on its T1D program. It recently said it was building a manufacturing facility specifically for T1D cell therapies.

If even one of these programs is successful, Vertex could see revenue soar down the road.