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Vertex Pharmaceuticals: Solid Pipeline, Management Team
Stock Analysis & Ideas

Vertex Pharmaceuticals: Solid Pipeline, Management Team

Vertex Pharmaceuticals (NASDAQ: VTRX) has traditionally developed and commercialized therapies that treat cystic fibrosis.   

Over the past several years, it has moved into producing and commercializing treatments for other illnesses such as Sickle Cell Disease and Beta Thalassemia by partnering with other companies such as Crispr Therapeutics and Moderna.

While on its Q3 2021 earnings call, VRTX CEO Reshma Kewalramani said that one of the most exciting things in the pipeline is CTX001, the therapy developed in partnership with Crispr.

Kewalramani noted that the phase three clinical trial for CTX001 is fully enrolled (in sickle cell and Thalassemia arms). VRTX expects to file for marketing authorization in the United States by the end of 2022. 

What I found most exciting about the news reported in the third-quarter earnings call was patients’ success on VTRX’s cystic fibrosis drugs. There was a 78% decrease in mortality for patients who were given the Vertex treatment(s), as well as an 89% decrease in the need for double lung transplants. 

Currently, 10% of cystic fibrosis patients are not eligible for the current VRTX treatments, and Vertex has partnered with Moderna to create a novel mRNA approach delivered to the airways via lipid nanosuspension to help this patient population. 

This is the first time that an mRNA particle has reached the cells of a non-human primate airway in-vivo. I believe this is huge for both companies and will be reflected in the value of each company’s stock as time goes on, and the stock market realizes what a big deal this new technology is for delivering gene therapies to the mucous membranes of humans and other primates.    

The company also has a novel therapy in its pipeline to create pancreatic islet cells and restore islet cell function to people who currently have type one diabetes. 

Vertex has not partnered with Crispr on this treatment. This second type of regenerative medicine will directly compete with the Crispr treatment.

Based on the intrinsic value of this stock, the Wall Street analyst’s estimates, blogger estimates covering Vertex Pharma, and the strength of its pipeline, I am bullish on this stock

Recent Results

Vertex Pharma’s stock has been trading between $176.36 (the 52-week low set on October 4, 2021) and $242.99 (the 52-week high set on January 25, 2021). 

Vertex brought in revenues of $7.14 billion over the last 12 months, with a net income of $2.18 billion. 

The company has reported third-quarter earnings of $3.56 per share, beating analyst estimates of $3.09 per share by $0.47. It has also reported $9.65 in earnings per share for the first nine months of 2021, beating analyst estimates of $8.32 for that period.

The company has a solid set of financial statements.  Vertex has a current ratio of 4.62, so it has enough current assets on hand to pay its bills for (almost) the next five years at its current burn rate. 

It could lower this number by investing the excess cash it has towards developing more products and running more clinical trials. 

When I calculated the stock’s intrinsic value by modeling discounted cash flows, I pegged it at $447.49. 

Wall Street’s Take

Sixteen Wall Street analysts have rated Vertex Pharma over the past three months.

The stock currently holds a Moderate Buy consensus rating, based on nine Buys, five Holds, and two Sells assigned. The average Vertex Pharmaceuticals price target of $249.69 suggests 13.2% upside potential.

Conclusion

This company offers promising hope to patients, and shareholders.

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