Vertex Pharmaceuticals (VRTX 1.00%) has been a terrific stock to own over the past decade. The stock has outperformed the market over this period, thanks to consistent financial results and excellent innovative capabilities. But how much longer can the biotech keep things up?
If you're interested in owning the stock for the long term, it's important to pay close attention to several parts of the company's business. Below are three key things to watch out for now.
1. Vertex's cystic fibrosis franchise
Vertex is best known for its work in developing and marketing medicines that target cystic fibrosis (CF) at its genetic roots. CF is a rare disease affecting the lungs. Although many have attempted to challenge the biotech in this area, none have yet succeeded; Vertex's therapies remain the only option for CF patients.
The company continues to generate substantial revenue from its CF franchise, and several developments are worth paying attention to now. In December Vertex earned approval in the U.S. for Alyftrek, a next-generation CF therapy with a more convenient once-daily dosing. This drug may soon become Vertex's most important product.
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The company is also seeking to develop newer medicines for CF patients who aren't eligible for any of its current treatments. VX-522, an investigational drug, could target many of these patients.
Approximately 75% of the 94,000 people with CF in North America, Europe, and Australia are currently benefiting from Vertex's products, whereas only 33% in other regions are, so there's still room to grow. Keep a watchful eye on continued clinical and commercial progress within Vertex's most important therapeutic area.
2. How will newer launches perform?
Vertex's success over the past decade has been driven by its CF franchise; it's had little diversification. However, the company recently earned approval for some medicines outside of its core market. In late 2023, Casgevy, a gene-editing therapy for two blood-related diseases that Vertex developed with CRISPR Therapeutics, landed regulatory approval. And in January of this year, Vertex's treatment for acute pain, Journavx, also got the green light from regulators in the U.S.
Casgevy isn't yet contributing much to the biotech's results; gene-editing therapies are complex to administer. However, this one holds considerable potential, as there's little competition to speak of. At $2.2 million per treatment course in the U.S., and with roughly 60,000 patients in the regions Vertex is targeting, Casgevy should exceed blockbuster status. Pay close attention to Vertex's comments on Casgevy's ongoing commercial progress.
The same applies to Journavx. Vertex developed this therapy to fill the need for non-opioid painkillers. It became the first oral pain-signal inhibitor approved by the U.S. Food and Drug Administration. Furthermore, Vertex is likely to seek label expansions for the medicine, including the treatment of painful diabetic peripheral neuropathy.
NASDAQ: VRTX
Key Data Points
3. Vertex's new gem, in type 1 diabetes
Vertex's next brand-new launch could be a medicine for type 1 diabetes (T1D) called zimislecel. The therapy is undergoing a phase 1/2/3 study, where it's showing real promise. For instance, most (10 out of 12) patients treated with zimislecel were insulin-free after one year of follow-up in the phase 1/2 portion of this clinical trial. All patients were also free of severe hypoglycemic events 90 days after treatment.
People with T1D typically cannot produce insulin, but this therapy helps restore their ability to do so. It could work as a functional cure for the chronic disease. Vertex plans to request approval from regulatory authorities for zimislecel next year, provided there are no significant clinical setbacks. It would be a great addition to the company's lineup -- and another product for Vertex investors to monitor closely.
Is the stock a buy?
Vertex shares look attractive for several reasons. First, the company's dominance in CF still affords it ample room to grow revenue and profits at a steady pace for the foreseeable future.
Second, although it's possible that another biotech will eventually crack the code and launch a competing CF therapy, Vertex is well prepared. That's precisely why the company has diversified its lineup in recent years, and will hopefully continue to do so with the launch of zimislecel.
Third, Vertex still has an exciting pipeline in CF and elsewhere. For instance, the company's late-stage candidate for APOL-1-mediated kidney disease, inaxaplin, looks promising. Currently, there are no approved treatments that target the underlying causes of this condition. Vertex could be the first to launch one.
Even if that program doesn't pan out, though, Vertex Pharmaceuticals' lineup, pipeline, and consistent financial results make its prospects attractive.
