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Vertex (VRTX) Stock Poised Well for Growth in 2023: Here's Why

Vertex Pharmaceuticals Incorporated VRTX enjoys a dominant position in the cystic fibrosis (CF) market. Vertex’s CF sales continue to grow, driven by its triple therapy, Trikafta/Kaftrio. New reimbursement agreements in ex-U.S. markets and label expansions to younger age groups are driving Trikafta/Kaftrio sales higher, a trend expected to continue this year.

While CF remains the main area of focus, Vertex is also developing treatments for sickle cell disease (SCD), beta thalassemia (TDT), acute and neuropathic pain, APOL1-mediated kidney disease (AMKD), type I diabetes, and alpha-1 antitrypsin (AAT) deficiency. It has earlier-stage programs in diseases such as muscular dystrophies.

This year is expected to be a catalyst-rich year for Vertex. Multiple clinical milestones are expected in 2023 and 2024, both in its CF and non-CF portfolio.

In the year so far, the stock has risen 19.5% against the industry’s 6.2% fall.

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Vertex is evaluating its medicines in younger patient populations and aims to have small-molecule treatments for most people with CF. Additionally, Vertex is also developing a mRNA therapeutic, VX-522, in partnership with Moderna MRNA for approximately 5,000 people with CF who cannot benefit from its CFTR modulators. Vertex and Moderna are conducting a single ascending dose (SAD) clinical study on VX-522, after the FDA cleared the investigational new drug application in December 2022. Vertex and Moderna expect to complete the SAD and initiate the multiple ascending dose study this year.

Vertex is also conducting two pivotal phase III studies, evaluating a triple combination of vanzacaftor/VX-561, a CFTR potentiator, deutivacaftor/VX-121, a CFTR corrector, and tezacaftor in CF patients 12 years and older. This new once-a-day combination medicine has the potential for enhanced patient benefit than Trikafta patients and can potentially treat CF patients who have discontinued Trikafta or other Vertex CF medicines. The studies are expected to be completed by the end of 2023. Vertex also initiated the pivotal development of vanzacaftor/tezacaftor/deutivacaftor in patients 6 to 11 years old

With AbbVie ABBV discontinuing its CF program recently, we believe, Vertex’s position is further strengthened in this market. AbbVie announced on the first-quarter conference call that it is discontinuing its cystic fibrosis program. The company analyzed data from an ongoing proof-of-concept study evaluating a triple combination therapy in CF. The results from the interim analysis did not meet AbbVie’s internal criteria for advancing the CF program, which prompted AbbVie to end the CF program.

While Vertex’s main focus is on the development and strengthening of its CF franchise, the company also has a rapidly advancing mid-to-late stage pipeline in eight disease areas beyond CF like acute pain, SCD, TDT, AMKD, AAT deficiency and cell therapy for type I diabetes. Many of these candidates represent multibillion-dollar opportunities. Six of the programs are past the proof-of-concept stage.

Vertex has co-developed a gene-editing treatment, exa-cel (formerly CTX001), in partnership with CRISPR Therapeutics CRSP, for two devastating diseases — SCD and TDT. Vertex is gearing up for the next commercial launch opportunity for exa-cel in SCD and TDT, with exa-cel’s BLA filing with the FDA now complete for both indications. Vertex expects the FDA to grant a priority review to the BLA. Vertex and CRISPR Therapeutics’ submissions on exa-cel in Europe and the United Kingdom are also under review.

Among its other CF programs, investors are paying a lot of attention to pain asset VX-548, which, they believe, has blockbuster potential. VX-548, a novel first-in-class, non-opioid NaV1.8 inhibitor, is being evaluated in two pivotal phase III acute pain studies, one following bunionectomy surgery and the other following abdominoplasty surgery. The pivotal program is expected to be completed in late 2023 or early 2024. Vertex initiated a phase II study of VX-548 in diabetic peripheral neuropathy, a form of peripheral neuropathic pain, in the fourth quarter of 2022. The neuropathic pain study is also expected to be completed in late 2023 or early 2024.

Vertex currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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