Vertex Pharmaceuticals could bolster its cystic fibrosis franchise with a next-generation drug, analysts said Tuesday. But VRTX stock remains stubbornly below a profit-taking zone.
Late Monday, Vertex said its next-generation triple-drug approach to cystic fibrosis — known by the shorthand vanza — showed promising results in a Phase 3 study. Vertex compared it to the company's flagship product, Trikafta, in a set of studies.
After 24 weeks, patients who received vanza showed improvement in their ability to forcefully exhale for one second. This is a key test of lung function in cystic fibrosis patients. On that measure, vanza proved it's not inferior to Trikafta.
Further, vanza showed it's superior to Trikafta in reducing levels of sweat chloride in patients. High levels sweat chloride are consistent with cystic fibrosis. Notably, 27.7% of patients who received vanza had lung infections vs. 32.2% of Trikafta recipients.
But analysts were split on how much of the market Vertex could win with vanza. Vanza doesn't offer as big of an effectiveness leap over Trikafta as Trikafta was over the previous generation of drugs. Still, analysts say vanza could help Vertex recapture a large percentage of the 6,000 patients who've stopped taking a Vertex drug. And the company expects many Trikafta patients to switch to vanza.
"We think the clinical case for vanza is clear, 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 was seen with Trikafta, for instance," Piper Sandler analyst Christopher Raymond said in a report.
On today's stock market, VRTX stock slumped 3% to 416.13. Shares broke out of a flat base with a buy point at 387.42 in December. Now, VRTX stock is trading well above the chase zone, according to MarketSmith.com.
VRTX Stock: Fourth-Quarter Beat
The fourth-quarter featured $2.52 billion in sales, above expectations for $2.51 billion, FactSet shows. Trikafta, which can treat 90% of patients with cystic fibrosis, generated nearly 93% of those sales. Adjusted earnings also rose 12% to $4.20 a share. That beat projections for $4.07 a share.
For the year, Vertex guided to $10.55 billion to $10.75 billion in product sales. That incorporates sales expectations for Casgevy, a sickle cell disease and beta thalassemia gene-editing treatment developed in partnership with Crispr Therapeutics. There are an estimated 30,000 patients with sickle cell disease and 7,000 beta thalassemia patients in the U.S. and Europe.
VRTX stock analysts forecast earnings of $15.03 per share and $9.86 billion in sales.
Split Casgevy Expectations
Analysts noted it's still early days for Casgevy. Piper Sandler's Raymond noted the launch is slow-going and estimates are too high. He interviewed one doctor involved in administering gene-editing drugs and gene therapies — a specialized process that must be completed at transplant centers.
"The institution has yet to work out a contract with any manufacturer and cost/access remains a formidable barrier, even before meaningful considerations around the six- to 12-month treatment burden, transplant center capacity and patient concerns around fertility," he said.
He brought his expectations for Casgevy sales down to $52 million, $149 million and $486 million for 2024, 2025 and 2026, respectively. Still, Raymond kept his buy rating and 450 price target on VRTX stock. Similarly, RBC Capital Markets analyst Brian Abrahams has "more cautious views on the risk for sickle cell disease" as well as Vertex's efforts in non-opioid pain treatment.
But William Blair analyst Myles Minter sees more promise from Casgevy. The first commercial patient is expected to begin the treatment process in the coming weeks. But Vertex doesn't recognize revenue from Casgevy until the patient has been infused.
"We remain optimistic on the launch prospects here given demonstrated risk/benefit, favorable pricing and improving access," he said in a report. Minter has an outperform rating on VRTX stock.
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