Vertex Pharmaceuticals Incorporated (VRTX Quick QuoteVRTX - Free Report) enjoys a dominant position in the cystic fibrosis (CF) market. In the first half of 2024, Vertex’s CF revenues rose almost 10%, driven by the continued strong performance of Trikafta/Kaftrio, including in younger age groups. While in the near term, expansion to younger age groups should drive CF sales growth, the potential launch of Vertex’s fifth CFTR modulator therapy, vanzacaftor triple combination, should drive growth in the medium term.

While CF remains the main area of focus, Vertex has seen rapid success in its non-CF pipeline candidates’ development in the past year. It has seen strong overall financial performance and robust pipeline progress in the recent past.

So far this year, Vertex’s stock has risen 15.9% against the industry’s 2.4% decline.

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Here, we discuss some reasons that have driven the stock’s outperformance.

Casgevy Diversifies Commercial Opportunity

Vertex and partner CRISPR Therapeutics’ (CRSP Quick QuoteCRSP - Free Report) one-shot gene therapy Casgevy was approved for two blood disorders, sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT), in multiple regions in late 2023/early 2024. Casgevy’s approval has diversified its commercial opportunity. 

Vertex and CRISPR Therapeutics’ Casgevy is the first-ever CRISPR/Cas9-based therapy to be approved anywhere in the world. Vertex and CRSP believe Casgevy has the potential to be a one-time functional cure for SCD and TDT patients, with an estimated patient population of approximately 35,000 across the United States and Europe.

Vertex is making rapid progress with the launch of Casgevy and is also making great progress with payers. Vertex expects to record Casgevy sales from the second half of 2024.

Upcoming Products

Vertex has additional near-term launches planned. These include suzetrigine for acute pain and vanzacaftor triple for CF.

Vertex’s new drug application (NDA) seeking approval for suzetrigine (formerly known as VX-548) across a broad label in moderate-to-severe acute pain is under review with the FDA. The FDA has granted a priority review to the NDA, with a decision expected on Jan 30, 2025.

Vertex’s NDA seeking approval for vanza triple, a next-in-class triple combination regimen for treating people with CF aged six years and older, is under review with the FDA. The FDA has granted priority review to this NDA, with a decision expected on Jan 2, 2025. Vertex’s regulatory application for vanza triple is also under review in the EU and some other countries. Vanza triple is a combination of vanzacaftor, a CFTR potentiator, deutivacaftor, a CFTR corrector and tezacaftor. This new once-a-day oral combination medicine has the potential for enhanced patient benefit than Trikafta and has become a new standard-of-care treatment in CF. It can potentially treat CF patients who have discontinued Trikafta or other Vertex CF medicines. It can also improve dosing (once daily) and lower the royalty burden.

Vertex also plans to initiate a pivotal phase III program of suzetrigine in diabetic peripheral neuropathy, a form of peripheral neuropathic pain caused by damage to nerves, in the third quarter of 2024. Vertex has rapidly completed enrollment in a phase II study of suzetrigine in patients with painful lumbosacral radiculopathy, another form of peripheral neuropathic pain. Data from this study is expected in late 2024. Vertex believes suzetrigine has the potential to transform the treatment paradigm of pain, both acute and neuropathic. Pain is an area with limited treatment options, mostly highly addictive opioid-based medications.

Rapid Pipeline Progress

In CF, Vertex is evaluating its medicines in younger patient populations and aims to have small-molecule treatments for most people with the condition. Vertex is developing an mRNA therapeutic, VX-522, in partnership with Moderna (MRNA Quick QuoteMRNA - Free Report) for approximately 5,000 people with CF who do not make CFTR protein and who cannot benefit from its CFTR modulators.

The May 2024 acquisition of Alpine Immune Sciences added povetacicept to VRTX’s pipeline. Vertex believes povetacicept has “pipeline in a product” potential. Povetacicept is designed to target two proteins, namely BAFF and APRIL, which are jointly responsible for the cause of multiple serious autoimmune diseases. A phase III study on povetacicept for the treatment of IgA nephropathy is expected to begin in the third quarter. Povetacicept is also being evaluated in two phase II basket studies, one in renal diseases and the second in B cell mediated cytopenias.

Vertex has a rapidly advancing mid- to late-stage pipeline in other disease areas like APOL1-mediated kidney diseases, alpha-1 antitrypsin deficiency and cell therapy for type I diabetes. Many of these candidates represent multibillion-dollar opportunities. This year is expected to be a catalyst-rich year for Vertex. It has plans to advance inaxaplin, povetacicept and suzetrigine (for DPN) into phase III studies this year. Several important clinical milestones are expected over the next few months in its CF and non-CF portfolio.

Conclusion

Vertex faces minimal competition in the CF franchise. CF sales are expected to remain strong despite a slight slowdown in the growth rate. Casgevy and suzetrigine (if approved) will provide the necessary diversification from the CF franchise. Its dependence on just the CF franchise for growth was a concern for several analysts but the company is gradually resolving it. The new drugs will propel its top line in future quarters. Vertex has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.