Vertex Pharmaceuticals is Wednesday's IBD Stock Of The Day. As the biotech eyes several blockbuster opportunities, VRTX stock is finding renewed support at its 200-day line.
The company is well-known for its cystic fibrosis treatments — a market that Vertex estimates at 88,000 patients. Of those, there are still 20,000 patients who could receive its old-school oral treatments. But analysts are watching for what's new from Vertex, including an updated regimen of three drugs that could strengthen Vertex's position against incoming rival AbbVie.
Beyond cystic fibrosis, Vertex is making waves with a pain alternative to opioids, a new approach to type 1 diabetes and treatments for serious kidney and liver diseases. On Tuesday, SVB Securities analyst David Risinger upgraded VRTX stock to an outperform rating from market perform and shares surged close to 4%.
"Our investment thesis is that potential positive financial inflections associated with next-gen triple combo in cystic fibrosis and pipeline developments can drive stock performance," he said in a note to clients.
VRTX Stock And A Flat Base
On the stock market today, Vertex stock dipped 0.7% to close at 309.86. But shares have found support at their 200-day moving average and remain well above their 50-day line, according to MarketSmith.com.
VRTX also is forming a flat base with a buy point at 324.85, though savvy investors could take advantage of an earlier entry above the 50-day moving average.
Despite largely saturating the cystic fibrosis market, there's still some room for Vertex to grow. During the recent J.P. Morgan Healthcare Conference, Vertex outlined its plans for a next-generation triple regimen and a messenger RNA-based approach in partnership with Moderna. The latter aims to help the roughly 10% of patients who don't respond to traditional medicine.
RBC Capital Markets analyst Brian Abrahams notes Vertex could have test results for its next-gen triple cystic fibrosis treatment in a year. The new medicine could require a less frequent dosing schedule vs. Vertex's existing three-drug regimen, Trikafta.
This could "not only convert current CF patients, but also further improve on persistence rates despite already high compliance," he said in a note.
Pain, Diabetes Drugs A Year Out
VRTX stock investors are also watching the company's efforts with a pain treatment. RBC's Abrahams estimates Vertex is roughly a year out from results in its pain program. If approved, the drug would be a step between traditional NSAID drugs like Advil and opioids.
Policymakers in the U.S. just pushed through financial incentives for non-opioid alternatives to pain treatment, according to Risinger, the SVB analyst.
"This should drive greater (pain drug) adoption than we previously anticipated, assuming it succeeds in Phase 3 (testing) in early 2024," he said in his report. Risinger also raised his price target on VRTX stock to 374 from 265.
Meanwhile, in diabetes, Vertex is proceeding with the second part of its study. The biotech company hopes to test three versions of its treatment. It's currently testing so-called "naked cells" in patients with type 1 diabetes. These cells aren't contained by a cell wall. Vertex is also planning to test gene-edited cells that wouldn't spark an immune response.
The company also hopes to test an implantable device that contains the necessary cells for treatment. But the Food and Drug Administration has placed that side of the program on hold. But enrollment is ongoing in Canada, RBC's Abrahams notes.
Abrahams has a sector perform rating on VRTX stock.
Billions In Sales Potential
These opportunities add up to several billion in potential sales, SVB's Risinger says.
He estimates the pain treatment could bring in $4.5 billion in 2032 sales. Other treatments in testing for liver and kidney diseases could win a combined $6.7 billion in sales that same year.
Notably, Vertex and Crispr Therapeutics hope to soon finish filing for approval of their gene-editing treatment for sickle cell disease and beta thalassemia. Risinger forecasts 2032 sales of $2.2 billion.
Bullishly, VRTX stock has a best-possible IBD Digital Composite Rating of 99. This puts shares in the top 1% of all stocks in terms of fundamental and technical measures.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
