Vertex Pharmaceuticals (VRTX -0.06%) generates billions of dollars in annual revenues from its treatments for the rare disease cystic fibrosis. And Vertex should continue to dominate in cystic fibrosis and bring in blockbuster revenue well into the future thanks to its life-saving treatments. But the big biotech company may soon also make headlines with a treatment for a far more common problem -- and this could result in a whole new massive revenue stream.
We've all suffered from this problem at one time or another. I'm talking about pain. The problem is that treatment options today are limited to a few over-the-counter options or prescription opioids. Vertex's candidate, VX-548, is a non-opioid option that the company thinks could take the market by storm.
Image source: Getty Images.
A "massive" opportunity
Vertex calls the opportunity in the pain relief indication "massive." After all, in just the U.S., doctors treat 80 million people annually for acute pain and 10 million people for peripheral neuropathic pain. Acute pain is what you may experience after an injury or surgery. Neuropathic pain is nerve pain, which can result from a variety of chronic conditions.
Both of these indications represent multibillion-dollar opportunities for Vertex due to the large number of patients and the lack of solid treatments today. The currently available drugs have long lists of side effects, often a lack of efficacy, and worst of all, the opioid options carry a notable risk of causing addiction.
In the case of acute pain, more than two-thirds of patients receive prescriptions during a hospital stay or as part of an outpatient procedure -- meaning most of the prescribing is done at hospitals. That's why Vertex plans on deploying a specialized sales force to target the 2,000 hospitals and 200 healthcare systems that dominate painkiller U.S. prescriptions.
As for neuropathic pain, Vertex plans on targeting the specialists who help patients manage their chronic conditions and pain levels.
Solving the pain problem
Vertex is getting closer and closer to potentially solving the pain problem. The company has completed phase 3 trials for the candidate -- VX-548 -- in abdominoplasty and bunionectomy. And it is on track to finish an additional safety and efficacy study by year's end. These studies are for the acute pain indication. Vertex aims to share the results of all three studies early next year.
The company designed the trials to support a labeling of the drug as indicated for moderate to severe acute pain, which would allow doctors to prescribe it to a broad range of patients.
Vertex continues to study VX-548 in neuropathic pain in phase 2 trials.
All of this means the company considers VX-548 one of its near-term launch opportunities, particularly in the acute pain indication. In the recent earnings call, Chief Operating Officer Stuart Arbuckle said the company is "actively planning for a potential near-term launch."
What does this mean for investors?
Vertex already has a solid and growing cystic fibrosis business. The company reported nearly $2.5 billion in third-quarter product revenue and raised its full-year product revenue forecast to more than $9.8 billion. This would represent a 10% increase from last year.
But in recent years, investors have become worried that even though Vertex dominates the cystic fibrosis indication, it was struggling to expand beyond that specialty. That weighed on the stock price a couple of years ago. Since then, though, Vertex has shown it can indeed succeed in other indications. Vertex and partner CRISPR Therapeutics are now awaiting regulatory decisions on exa-cel, the gene-editing therapy they developed together to treat a pair of rare blood disorders.
And Vertex's pain candidate -- with major blockbuster potential -- is approaching the finish line too.
All of this means Vertex has the elements needed to win over the long haul: a solid earnings track record, leadership in a multibillion-dollar market, and potential products that could significantly boost its growth.
At the same time, Vertex is trading for 25 times forward earnings estimates, which looks pretty cheap considering all of those positive points. So, yes, the pain program could be Vertex's ticket to a new wave of blockbuster revenue. And Vertex could be your ticket to growing wealth over the long term.
