Vertex (VRTX) Stock Up 70% In A Year's Time: Here's Why

Vertex Pharmaceuticals, Inc. (NASDAQ:VRTX) shares are up 70.1% in the past year, comparing favorably with an increase of 9.6% for the industry.

The company presently markets two cystic fibrosis ("CF") drugs - Kalydeco and Orkambi – and also boasts a strong CF pipeline.Its broad portfolio of next-generation CF correctors, which could bring in multi-billion dollar sales for the company if approved, has been attracting investor attention.

For Vertex, 2017 was a tremendous year with positive data read-outs and regulatory approvals leading to an increase in the eligible patient population for Kalydeco & Orkambi.

In May 2017, Kalydeco gained FDA approval for use in patients 2 yearsand older who have one of 23 residual function mutations in the CFTR gene. More than 900 people in the United States have one of these mutations. In August 2017, Vertex received FDA approval for use in more than 600 additional people who have mutations responsive to Kalydeco, including one of five "splice" mutations. These line extensions have expanded the eligible patient population to treat with Kalydeco to 6000 and boosted the drug’s sales

Meanwhile, in January 2018, Kalydeco showed improvement across multiple endpoints, including measures of pancreatic function in a phase III study in children less than two years of age. Based on this data, Vertex plans to file regulatory applications for approval of Kalydeco in children aged 1 to 2 years in the first quarter of 2018.

Moreover, Vertex is also focused on increasing patient access for Orkambi by signing reimbursement agreement in several countries. Meanwhile, the European Commission has approved a line extension for Orkambi this month to include use in children with CF aged between six and 11 years and have two copies of the F508del mutation. This line extension is expected to expand the targeted patient population by about 3,400 patients.

Vertex is evaluating CF corrector tezacaftor (VX-661) in combination with ivacaftor. In March 2017, Vertex announced positive data from two phase III studies on VX-661 – EVOLVE and EXPAND. Both studies met their primary endpoints and demonstrated statistically significant improvements in lung function in two different CF-patient population. Based on positive outcome from the studies, regulatory application is under review in the United States, with a decision expected next month.

Moreover, Vertex is also evaluating some next-generation CFTR correctors (VX-152, VX-440, VX-659 and VX-445) as part of a triple combination with tezacaftor and ivacaftor.

Data from VX-152 and VX-440 phase II and VX-659 phase I triple combination studies presented in July 2017 showed that all three combinations led to pronounced improvement in lung function. The company is also developing fourth next-generation corrector, VX-445 in a phase II study, with data expected in early 2018.Successful data readout will further boost the stock.

Meanwhile, the company is also looking to buy CF candidates, which can be combined with tezacaftor and Kalydeco to create triple combinations. In July 2017, Vertex bought Concert Pharmaceuticals, Inc.’s (NASDAQ:CNCE) CF pipeline candidate, VX-561 (CTP-656). Vertex is developing the candidateas a potential once-daily triple combination in combination with its other pipeline drugs to treat the underlying cause of CF.

We remind investors that the CF market represents huge commercial potential. It is a rare, life-threatening disease estimated to affect about 75,000 people in North America, Europe and Australia. The CF combination regimens, if approved, can strengthen its position further in this market, which can translate into higher revenues.

Zacks Rank & Stocks to Consider

Vertex carries a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include Exelixis, Inc. (NASDAQ:EXEL) and Bioverativ Inc (NASDAQ:BIVV) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Exelixis’ earnings per share estimates have remained stable at 49 cents for 2017 and increased from 72 cents to 73 cents for 2018 over the last 60 days. The company delivered positive earnings surprises in all four trailing quarters with an average beat of 572.92%.

Bioverativ’s earnings estimates have increased from $3.08 to $3.21 for 2017 and from $3.39 to $4.04 for 2018 over the last 60 days. The company delivered positive earnings surprises in three of the four trailing quarters with an average beat of 17.09%.

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