Vertex Pharmaceuticals (VRTX -0.06%) has brought in billions of dollars in earnings over time thanks to its leadership in the market for cystic fibrosis (CF) treatment. And along with partner CRISPR Therapeutics, Vertex recently won approval for another potential blockbuster -- this time, a gene-editing treatment for blood disorders.
These programs are significant and should help Vertex continue to boost revenue over time. But the opportunities don't stop there.
Vertex also is working on a candidate that addresses one of the world's most common problems: pain. The company is wrapping up a pivotal program now and expects to report data early next year. Could this potential product be a gold mine for Vertex?
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Problems with today's pain drugs
First, let's take a quick look at the pain market. At first glance, it may seem saturated with products, from over-the-counter ones like acetaminophen to prescription opioid painkillers. But there are a few problems with today's options. For example, some of the nonprescription options lack efficacy for severe pain, and have side effects like liver toxicity. And opioids come with the very big problem of addiction risk. This means the pain market actually doesn't offer patients a lot of options, so a new drug could be just what the doctor ordered.
The advantage of Vertex's VX-548 is that it offers efficacy but without the side effects associated with other painkillers. This non-opioid pain candidate works by inhibiting the activity of a sodium channel that plays a key role in pain signaling.
We all know that there are many types of pain -- and it can range from minor to severe. With VX-548, Vertex has zeroed in on two areas that offer it a wide market opportunity: acute pain and neuropathic pain. Acute pain is the sort caused by injury or surgery, while neuropathic is nerve pain, which may be linked to a variety of health conditions.
Every year in the U.S., more than 90 million patients seek treatment for acute or peripheral neuropathic pain -- so the markets are huge.
Vertex's near-term launch opportunity
Acute pain, a $4 billion market, represents a near-term launch opportunity for Vertex, and a few elements should work in the company's favor. First, two-thirds of prescribing volume is concentrated in hospitals -- and most of it within about 2,000 hospitals. With a specialty sales force, Vertex should be able to specifically connect with prescribers and inform them about the new product if it's approved.
Second, prescribers are likely to be receptive since many hospitals have implemented policies to limit opioid prescribing -- so doctors are in need of options for their patients. Finally, legislation -- the Non-Opioids Prevent Addiction in the Nation (NOPAIN) Act -- boosts patient access to non-opioid options by requiring separate Medicare reimbursements for them. So, hospitals and doctors are encouraged to go for non-opioid options, something that clearly could help Vertex gain market share.
The company initially is seeking a label for moderate to severe acute pain, a broad label that should allow prescribing across multiple healthcare settings. This will be based on VX-548's phase 3 data, to be released in the coming months as mentioned above.
Vertex is also studying VX-548 in various types of neuropathic pain, and recently reported positive phase 2 data in diabetic peripheral neuropathy. The company plans to advance into pivotal trials for this indication, and it's recently launched a phase 2 study in another type of nerve pain -- lumbosacral radiculopathy.
A possible gold mine ahead?
Let's get back to our question: Could this potential pain drug be a gold mine for Vertex? It's important to note that Vertex's core CF portfolio remains a huge growth driver -- and that's likely to continue. Thanks to its solid innovations and patents, Vertex could dominate this market through at least the late 2030s. Last year, these products generated $8.9 billion in revenue.
It's too early to say whether the pain market will generate the same levels of revenue -- or even more. Still, I think it's fair to say this new market does represent a gold mine -- certainly a blockbuster opportunity -- thanks to the pervasiveness of pain, the limited treatment options today, and VX-548's performance so far. Also, if the candidate wins regulatory approval, Vertex has the commercial expertise and infrastructure to support product uptake.
So, what does this mean for you? Vertex shares have climbed over time, and this year they've gained about 40%. But Vertex has what it takes to spur performance down the road too, thanks to the pain program and its CF portfolio. And that's why Vertex is a great biotech stock to buy today and hold onto for the long term.
