Vertex Pharmaceuticals is the IBD Stock Of The Day. After pulling back, VRTX stock has bounced off its 50-day line as investors watch for the first sales of its gene-editing drug.
That drug, dubbed Casgevy, is now approved in multiple countries, including the U.S. While Crispr Therapeutics stock has surged more than 32% this month, analysts are more cautious on its partner, Vertex.
Shares broke out in December and then pulled back over several weeks this month. Now, VRTX stock is jumping off its 50-day and 10-week moving averages, according to MarketSmith.com.
In addition to the gene-editing treatment for sickle cell disease and beta thalassemia, Vertex is working on a treatment for pain and a next-generation approach to cystic fibrosis.
But Maxim Group analyst Naz Rahman is skeptical.
"The pipeline has matured and it is unclear what the growth driver is after cystic fibrosis," he said in a client note following the company's earnings release this month. He kept his hold rating on VRTX stock.
VRTX Stock Is Now Actionable
That doesn't mean Vertex stock isn't showing some winning signs.
Savvy investors could buy in at 427.15, the intraday high from Feb. 15. In midday trading on today's stock market, VRTX stock was up more than 1% at 431.21.
During the fourth quarter, sales increased 9% to $2.52 billion, and adjusted profit climbed nearly 12% to $4.20 per share. Both metrics beat expectations.
Investors are now closely watching the Casgevy launch. Piper Sandler analyst Christoper Raymond said there could be capacity constraints and reimbursement barriers. Patients who receive Casgevy must first undergo a conditioning regimen that wipes out their bone marrow. The drug itself must be infused at a specialty center. And, at $2.2 million a pop, insurers could struggle to foot the bill.
William Blair analyst Myles Minter notes there are 12 authorized treatment centers for Casgevy in the U.S. and three in Europe. Eventually, Vertex hopes to boost those numbers to 50 and 25, respectively. Minter kept his outperform rating on VRTX stock, but he said the Casgevy launch could be slow moving.
"The first commercial Casgevy patient is expected to begin the treatment process in the coming weeks but patient numbers will not be reported until cell mobilization has begun and Vertex does not recognize revenue until patients are infused with the Casgevy launch," he said in a report.
Maxim's Rahman noted that roughly 80% of U.S. patients with sickle cell disease have a pathway to receive reimbursement through commercial insurance. About 60% of Medicaid patients could also get coverage.
Cystic Fibrosis At Forefront
Beyond gene editing, VRTX stock analysts are also keeping an eye on the company's next-generation treatment for cystic fibrosis. Today, Vertex leads that market with a triple-regimen called Trikafta that can treat nine in 10 patients with the lung disease.
In a Phase 3 study, the next-generation drug, known by the shorthand vanza, proved it's not inferior to Trikafta on a key measure. After 24 weeks, patients showed improvement in their ability to forcefully exhale for one section. This is a key measure of lung function for cystic fibrosis patients.
Vanza also proved superior to Trikafta in lowering levels of sweat chloride, a marker of the disease.
"But we've heard from bears around payer pushback, especially in converting actively treated patients, given the magnitude of benefit isn't as clear as what was seen with Trikafta for instance," Piper Sandler's Raymond said in a report.
He kept his overweight rating on VRTX stock.
Is The Pain Drug Next?
The pain drug could also garner renewed interest this year. But analysts have split opinions on that drug. Among patients who received an abdominoplasty — commonly called a tummy tuck — the drug proved it's not inferior to an opioid. But the drug looked inferior to opioids in patients after a bunion removal.
Vertex plans to ask the Food and Drug Administration to approve its treatment in mid-2024. It's also testing the drug in chronic pain among patients with diabetic peripheral neuropathy. Leerink Partners analyst David Risinger expects Vertex to begin a Phase 3 study in the same patient group this year.
He has an outperform rating on VRTX stock.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
