Vertex Pharmaceuticals (VRTX +8.28%) has wowed investors in recent times as it's expanded beyond its specialty area of cystic fibrosis (CF) treatment. The company launched Casgevy, a one-time curative gene editing treatment for blood disorders sickle cell disease and beta thalassemia. And Vertex recently reported positive data from trials of its pain management candidate and aims to file for regulatory review this year.
All of this is great and could result in billions of dollars in revenue. But Vertex also recently announced some news that may ensure its dominance in CF, which last year generated more than $9.8 billion in product revenue for the company. Vertex in the past said it's set to dominate the CF market through the mid-2030s, but this latest step could extend that further. That's because Vertex soon aims to file for regulatory review of a CF candidate that may even beat its biggest blockbuster. Let's find out more.
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Vertex's CFTR modulators
First, a bit of background on Vertex's CF portfolio. The company develops CFTR modulators, pills taken twice daily to correct the functioning of a particular protein. And this helps regulate the flow of water and chloride through the cells of various organs, including the lungs. The products, led by Vertex's most recent blockbuster, Trikafta, have been transformative for patients, improving quality of life and extending lives.
In recent times, Vertex has shepherded a new candidate through the pipeline and says it plans to file for regulatory review by the middle of this year. Vertex demonstrated in clinical trials that this candidate, known as the "vanza triple" (a combination of vanzacaftor, tezacaftor, and deutivacaftor), actually outperforms the company's star drug, Trikafta.
NASDAQ: VRTX
Key Data Points
The vanza triple showed its non-inferior to Trikafta in improving lung function. And the candidate beat Trikafta when it comes to lowering sweat chloride levels -- these levels are high in CF patients because they have trouble clearing chloride from their cells. On top of this, the vanza triple is a once-daily pill, offering an easy regimen to follow.
Results were particularly impressive in Vertex's studies of children as, on the vanza triple, 95% achieved sweat chloride levels below the cut off level for a positive CF test. And 50% reached carrier levels, a level associated with no manifestation of disease symptoms.
So, there's reason to be optimistic about an approval as well as uptake of this potential gamechanger. As for uptake, the company expects the vanza triple to interest patients who've discontinued Trikafta due to a side effect or difficulty following the twice-daily treatment regimen. And the company says even patients doing well on Trikafta likely will want to progress to this latest option.
A solid patent position
Now, let's turn to Vertex's market position. Trikafta's patent expires in 2037, meaning the company's prediction of leadership through that point looks sound. The vanza triple clearly could extend this, as it's a newer candidate, and patents are granted for 20 years from the filing date. Vertex also should benefit because its royalty burden on the vanza triple is lower than on its other CF drugs -- lower in the single digits compared to just under 10% for the CF portfolio today.
All of this means the vanza triple is big news for Vertex and could be the key to the biotech extending its leadership in the billion-dollar CF market over the long haul. Of course, Vertex's newer programs are exciting, but we shouldn't underestimate the potential of its older business to renew itself and grow.
CF has been a huge revenue machine for the company, and the vanza triple may drive another wave of billion-dollar earnings growth over the years to come at this top biotech player. That's great news for investors who buy the stock today and for those who have been holding on to it since the earlier days of the company's CF story.
