Vertex Down 13% in 6 Months: Buy, Sell or Hold the Stock?

The stock of Vertex Pharmaceuticals Incorporated VRTX has declined almost 13% in the past six months.A key reason for the stock price decline was unimpressive data from a phase II study on its key pipeline candidate, suzetrigine, for painful lumbosacral radiculopathy (LSR), a form of peripheral neuropathic pain, which showed largely undifferentiated pain reduction from placebo. Despite the unimpressive data in phase II, management decided to forge ahead to a phase III study in this indication, which is considered a risky decision.When it comes to the drug and biotech sector, a major pipeline setback can hit the stock hard. So, it becomes important to understand the company’s strengths and weaknesses to better analyze how to play the stock given the recent dip in price.Consistent Rise in VRTX’s CF Product SalesVertex’s cystic franchise (“CF”) sales continue to grow, driven by higher sales of Trikafta/Kaftrio in younger age groups. In the first nine months of 2024, Vertex’s revenues rose 10%. While in the near term, expansion to younger age groups should continue to drive CF sales growth, the launch of Vertex’s fifth CFTR modulator therapy, Alyftrek or vanza triple, should drive growth in the medium term. Alyftrek (vanza triple), a next-in-class triple combination regimen for treating people with CF aged six years and older, was approved by the FDA in December 2024.Casgevy Diversifies VRTX’s Commercial OpportunityVertex and partner CRISPR Therapeutics’ CRSP one-shot gene therapy Casgevy was approved for two blood disorders, sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT), in multiple regions in late 2023/early 2024. Casgevy’s approval has diversified Vertex’s commercial opportunity. Vertex and CRISPR Therapeutics’ Casgevy is the first-ever CRISPR/Cas9-based therapy to be approved anywhere in the world. Vertex believes Casgevy has the potential to be a one-time functional cure for SCD and TDT patients, with an estimated patient population of approximately 35,000 across the United States and Europe. Vertex is securing reimbursement and access to Casgevy globally. Casgevy is expected to contribute significantly to revenues from 2025.Vertex’s Upcoming New ProductsVertex is preparing for two potential near-term launches — suzetrigine in acute pain and Alyftrek (vanza triple) in CF in 2025Vertex's new drug application (NDA) seeking approval for suzetrigine (formerly known as VX-548) across a broad label in moderate-to-severe acute pain is under review with the FDA. The FDA has granted a priority review to the NDA, with a decision expected on Jan. 30, 2025.Vertex initiated a pivotal phase III program of suzetrigine in diabetic peripheral neuropathy, a form of peripheral neuropathic pain caused by damage to nerves, in the third quarter of 2024.  Vertex believes suzetrigine has the potential to transform the treatment paradigm of pain, both acute and neuropathic. Pain is an area with limited treatment options, mostly highly addictive opioid-based medications.While Alyftrek was approved in the United States in December, the candidate is under review in the EU and some other countries.Alyftrek is a combination of vanzacaftor, a CFTR potentiator, deutivacaftor, a CFTR corrector and tezacaftor. This new once-a-day oral combination medicine has the potential to offer enhanced patient benefit than Trikafta and become a new standard-of-care treatment in CF. It can potentially treat CF patients who have discontinued Trikafta or other Vertex CF medicines. It can also improve dosing (once daily) and lower the royalty burden.Vertex’s Robust Mid-Stage PipelineIn CF, Vertex is evaluating its medicines in younger patient populations and aims to have small-molecule treatments for most people with the condition. Additionally, Vertex is developing an mRNA therapeutic, VX-522, in partnership with Moderna MRNA for approximately 5,000 people with CF who do not make CFTR protein and who cannot benefit from its CFTR modulators.While Vertex’s main focus is on the development and strengthening of its CF franchise, the company also has a rapidly advancing mid- to late-stage pipeline in other disease areas beyond CF like acute and neuropathic pain, APOL1-mediated kidney diseases (AMKD), alpha-1 antitrypsin (AAT) deficiency, IgA nephropathy and cell therapy for type I diabetes. Many of these candidates represent multibillion-dollar opportunities. Several important clinical milestones are expected over the next few months in its CF and non-CF portfolio.Last year’s Alpine acquisition added povetacicept to Vertex’s pipeline, which Vertex believes has a “pipeline in a product” potential. Povetacicept is designed to target two proteins, namely BAFF and APRIL, which are jointly responsible for causing multiple serious autoimmune diseases. A phase III study on povetacicept for the treatment of IgA nephropathy began in the third quarter. Povetacicept is also being evaluated in two phase II basket studies, one in renal diseases and the second in hematologic conditions.Valuation, Estimates and PriceIn the past year, Vertex’s stock has risen 0.1% against the industry’s 3.4% decrease.VRTX Stock PerformanceImage Source: Zacks Investment ResearchThe stock is trading at a premium to the industry, as seen in the chart below.VRTX Stock ValuationImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for 2025 earnings has declined from $18.61 to $18.26 per share over the past 30 days.VRTX Estimate MovementImage Source: Zacks Investment ResearchStay Invested in VRTX’s StockDeclining estimates for 2025, a premium valuation and the recent price drop have made investors wonder if they should sell the stock. The recent pipeline setbacks are also a matter of concern for investors.However, we believe Vertex is a good stock to have in one’s portfolio based on its strong overall financial performance and robust pipeline progress. Vertex faces minimal competition in the CF franchise. CF sales are expected to remain strong despite a slight slowdown in the growth rate. Casgevy and suzetrigine (if approved) will provide the necessary diversification from the CF franchise. The company’s dependence on just the CF franchise for growth was a concern for several analysts but it is gradually resolving it. The new drugs should propel its top line in future quarters.Though VRTX’s stock currently looks expensive, we don’t see any need to sell the stock as the company has growth potential. Those who already own the stock may retain it for some time to see if its CF sales continue to rise and how the Casgevy launch progresses. Vertex presently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Vertex Pharmaceuticals Incorporated (VRTX): Free Stock Analysis Report Moderna, Inc. (MRNA): Free Stock Analysis Report CRISPR Therapeutics AG (CRSP): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks