Biotech stock Vertex Pharmaceuticals is in the buy zone of a base. Vertex stock is Tuesday's IBD 50 Stocks To Watch pick. VRTX shares have gained 16% this year so far.
The company specializes in treatments for cystic fibrosis, a rare life-shortening genetic disease affecting more than 88,000 people globally.
Vertex stock moved up to the second spot out of the huge list of 791 stocks in the biotech industry group. The group quickly moved up to the 31st spot from 69th four weeks ago, out of the 197 IBD industry groups.
Expanding Markets And New Opportunities
New York-based Stablix announced today a partnership and license agreement with Vertex to discover and develop novel small molecules for targeted protein stabilization (TPS).
Stablix is a biopharmaceutical company specializing in TPS as a form of therapeutic treatment. Stablix will use its platform to find small molecule drug candidates that target specific diseases.
The deal gives Vertex an exclusive license to the proprietary molecules, and it will be solely responsible for development and commercialization.
"We are excited to partner with Stablix to explore the potential of the new modality of targeted protein stabilization as we continue to broaden the tools and technologies we have available to develop transformative medicines," said Mark Bunnage, senior vice president and head of research at Vertex.
Vertex had another win on April 10, with Health Canada Market Authorization for its Orkambi cystic fibrosis drug in children age 1 to less than 2.
The approval came after a 24-week Phase 3 study of 46 children that concluded the drug acted similarly to those in patients 2 years old and older, and was well tolerated.
Vertex And Crispr Team Up Again
On April 3, Vertex and Crispr Therapeutics submitted applications for rolling biologics license applications (BLAs) to the U.S. Food and Drug Administration for the treatment of sickle cell disease and a severe form of anemia.
If granted, it would shorten the FDA's review process to eight months from the time of submission vs. the typical 12 months.
On March 27, the two companies announced a nonexclusive licensing agreement. Vertex will use Crispr's gene editing technology to develop type 1 diabetes cell therapies. The company will pay $100 million upfront while future payments will include royalties.
Vertex Stock In The Buy Zone
Vertex stock hit an all-time high today after gaining almost 1% on the Stablix partnership announcement, before reversing modestly lower.
Vertex stock is in a 5% buy zone of a cup base reaching to 341.55, after the stock cleared a 325.29 buy point on April 12, according to MarketSmith pattern recognition.
Vertex reported better-than-expected Q4 earnings per share and in-line sales in early February. Management also offered full-year 2023 revenue guidance of $9.55 billion to $9.7 billion for its cystic fibrosis treatment Trikafta, at the top end of analyst estimates.
Vertex stock rose above the 50-day line on March 16, after the company revealed positive phase 2 results for a therapy used to treat chronic kidney disease. RBC Capital on April 6 raised its price target to 303 from 299.
Shares inched higher following the Health Canada announcement and broke out of the base two days later. Vertex stock has been in the buy zone since the breakout, only falling below the buy range on one day.
Pharma Stock Earnings Out Next Week
On Feb. 7, Vertex beat expectations on its December-ended quarterly earnings with in-line sales.
Q4 earnings grew 25%, up from 14% in the prior quarter. Quarterly sales grew 11% year over year, down from 18% and 22% in the last two quarters.
Analysts expect 9% EPS growth this year then a drop of 8% in 2024. Vertex has a 30% three-year EPS growth rate according to IBD Stock Checkup.
Vertex reports Q1 earnings on May 1. We'll see if they can beat on both top and bottom lines this quarter.
Mutual funds hold 61% of shares, with 3,507 owning Vertex stock in December, down from 3,526 in December and 3,356 in September, therefore a red flag in the recent quarter.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
