The business was poised to provide regulators with a promising and maybe blockbuster prospect.
Even better, the approval of exa-cel, a candidate for blood diseases, would demonstrate that Vertex was capable of succeeding in markets unrelated to the treatment of cystic fibrosis (CF). Investors may now ask if the positive news has been included into Vertex share prices and if gains have peaked. However, Vertex’s CEO’s five words give hope that the major biotech has a lot more to come.
The Vertex narrative to date
But first, a short synopsis of Vertex’s past events: The business is a leader in CF treatment on a global scale. Trikafta, its most recent medication, helped Vertex make $3.3 billion in profit and $8.9 billion in product revenue last year. The growth rates here are 18% and 42%, respectively. Additionally, the business’s sales increased in the double digits for the eighth consecutive year in 2022.
However, investors have expressed concern that Vertex is overly reliant on its CF portfolio. Progress with Exa-cel gave them confidence last year, which led to a rise in the shares. Exa-cel may gain popularity among physicians and patients if it is authorized because there are currently few treatments available for the specific blood diseases it targets. Exa-cel is also intended to be a one-time curative therapy, which is another major benefit.
After a prospective approval of exa-cel, some investors could now ask if Vertex’s share price momentum would slow down.
She was speaking about Vertex’s possible future earnings, after all.
Kewalramani stated that each pipeline product in its mid- and late-stages “represents a multibillion-dollar commercial opportunity” spanning eight disease categories.
Five fresh items
Vertex intends to introduce five new medications into these disease categories during the next five years, which explains why. Naturally, the business anticipates exa-cel to be the first. Next, Vertex is banking on a potential new CF medication that might outperform Trikafta; the candidate is now through phase 3 tests.
A non-opioid painkiller from Vertex may be available at the perfect time. The Non-Opioids Prevent Addiction in the Nation Act, a recently approved law, may encourage hospitals to prioritize nonopioid alternatives.
Vertex’s type 1 diabetes contender might likewise change the game. It is intended to be a practical remedy for yet another disease with few available therapeutic choices.
Vertex has the financial capacity necessary to progress these initiatives and set up the necessary infrastructure for commercial launches thanks to its more than $10 billion in cash.
Additionally, Vertex has a track record of boosting free cash flow and return on invested capital.
All of these factors suggest that there will be several triggers for Vertex’s shares to increase, at least during the next five years. And after that, owing to new items, sales growth might continue to influence pricing performance even later on.
Because of this, Vertex shares currently appear extremely cheap, selling at less than 20 times projected earnings forecasts. Therefore, part of the really positive news may have already been included into Vertex’s pricing today, but not all of it. According to Kewalramani, this success story is still in its infancy, which makes Vertex a sensible purchase for long-term investors.