Biotech giant Vertex Pharmaceuticals (VRTX -0.06%) has delivered market-beating returns over the past 12 months, five years, and 10 years. Existing shareholders are happy, but those still on the sidelines may wonder whether it's still worth investing in this drugmaker. The good news is that those late to the party can rest assured that Vertex Pharmaceuticals remains an excellent buy. Let's consider why the biotech is a solid long-term bet.
Vertex's core franchise is doing well
If there is just one thing to know about Vertex, it is that it holds an actual monopoly in its core therapeutic area: cystic fibrosis (CF). This rare and devastating genetic disorder causes damage to the lungs and leads to a shortened life expectancy. Vertex's medicines target the underlying genetic causes of the illness, and since it is such a severe disease, these drugs aren't a luxury for patients -- they are a necessity. Vertex's dominance in this field grants it pricing power. And while others have tried to challenge it, no one has succeeded.
Vertex's work in CF is the reason it has crushed the market over the past decade, and it is still going strong. In the first nine months of 2023, the company's revenue of $7.3 billion jumped by 11% year over year. Here's some more good news for Vertex: Of the 88,000 CF patients in its core markets, more than 20,000 remain untreated but are eligible for its current therapies.
There are 5,000 more who aren't eligible for any of its approved products, but the biotech is working on developing new ones. Considering Vertex has been in this market for over 10 years, the remaining opportunities are exciting. The biotech should rely on its CF medicines to help drive solid financial results through at least the next five years.
A new era is about to start
It can be dangerous for a company to be a one-trick pony, no matter how good the trick is. That's why Vertex Pharmaceuticals has been looking to diversify its portfolio despite its success in CF. The company recently achieved that goal with the approval of Casgevy, a gene editing treatment for sickle cell disease (SCD) and beta-thalassemia (TDT), a pair of rare blood diseases. Casgevy is approved in the U.S. for SCD, and in the U.K. for SCD and TDT.
More approvals should come down relatively soon. Vertex Pharmaceuticals developed the medicine in collaboration with CRISPR Therapeutics. Casgevy will cost $2.2 million in the U.S., which is not at all unreasonable for a gene-editing medicine. Case in point: Bluebird Bio also earned approval for a competing SCD medicine, which it decided to price at $3.1 million.
Vertex Pharmaceuticals does have an advantage here thanks to its being more cash-rich than Bluebird, not to mention the former's well-established ability to negotiate with third-party payers, many of whom it already has relationships with. Vertex Pharmaceuticals and CRISPR Therapeutics are going after an initial patient population of 32,000 people.
Pending label expansions, that could rise to well over 100,000 patients. At a price tag of $2.1 million, it's not hard to see the potential here.
There is more where that came from
There are more promising programs in the pipeline for Vertex. At the end of last year, it posted positive phase 2 results for its VX-548 therapy in treating neuropathic pain. The medicine is also undergoing a phase 3 trial for acute pain, and top-line data is expected early this year. The biotech is planning to release data from a late-stage study for a next-gen CF therapy relatively soon.
Vertex's pipeline also features ambitious programs, including in trying to develop a functional cure for type 1 diabetes. Vertex Pharmaceuticals and its shareholders have already reaped the rewards for the company's excellent innovative capabilities, but by the looks of it there is plenty left in the tank. That's why investors can still safely add shares of this biotech stock to their portfolios and hold them for at least the next decade.
