The biotech sector suffered a mixed run of fortunes lately. While some industry stalwarts, like Pfizer, Stryker, and Roche, are down double digits this year, others, such as AstraZeneca and Incyte, have actually seen their stock rise over the last four months or so.
Two companies that embody the Janus-faced nature of the market are drug manufacturers Moderna and Vertex. While the now-famous Boston-based RNA therapeutics firm has tanked more than 70 percent from its all-time high, its city rival, VRTX, has outperformed the S&P 500 in 2022, growing 18 percent against the index’s 1300 bps decline.
But despite their past histories, these companies still make for a formidable pair, and could prove a great pick for investors looking for a long-term hold. So, without further ado, let’s find out what makes each one such an attractive buy.
Vertex Pharmaceuticals (VRTX) is easily the most dominant player in the Cystic Fibrosis therapy space right now.
The company’s premier drug, Trikafta, has turned what was once a dire prognosis into something of a treatable condition, giving VRTX a near monopoly on the pharmaceutical treatment of the disease.
The big breakthrough for the company came around ten years ago when Vertex developed what would be the first ever treatment tackling the underlying cause of Cystic Fibrosis.
The disease is one of the most common genetic disorders found among European-derived populations, and is caused by mutations that trigger the improper folding of the CFTR protein. This can result in the build up of a thick mucus layer in various organs of the body, leading to severe respiratory issues and other associated problems.
The drug – which was then named Kalydeco at the time – was able to rectify the defect in cellular-level chloride and water transport that is the hallmark symptom of Cystic Fibrosis, bringing about profound changes to those with the disease. The medicine was then combined with two other CFTR correctors, tezacaftor and elexacaftor, to create a triple-combination therapy that is effective in treating almost all those afflicted by the condition.
Indeed, the success of Trikafta has helped transform Vertex into a $70 billion company, with its full year product sales increasing at an annual rate of 22 percent throughout 2021.
Much of this growth was due to the launch of Trikafta in a number of new international territories, as well as the roll-out of the drug to children in the 6-11 years old category. Revenues spiked $1.4 billion to $7.6 billion last year, with sales of Trikafta making up 75 percent of that haul.
And yet, despite the enormous success of Trikafta, the company also has a robust pipeline of other candidate drugs as well. For instance, there’s its CTX001 program designed to treat severe sickle cell disease, which, in conjunction with CRISPR Therapeutics, it is hoped that a non-viral gene-editing therapy can be found to deliver a functional cure for the monogenic disorder.
Furthermore, VRTX is carrying out a Phase 2 dose ranging study with VX-548, a non-opioid NaV 1.8 inhibitor, that has shown promise in the treatment of both acute and chronic pain. Other advanced projects include the stem cell-derived VX-880 therapy – a potential cure for Type 1 diabetes – and VX-147, a small molecule inhibitor that could be used to treat patients with AMKD.
Regardless of the success of VRTX’s alternate product pipeline, the company can still rely on its Trikafta business for some time yet. The drug’s key patents are safe until at least 2037, giving the firm plenty of runway to keep on developing new products for many years to come.
It’s not too much of an understatement to say that the past nine months have been disastrous for vaccine manufacturer Moderna (MRNA).
In fact, for a company that was once flying high on the tailwinds of a global pandemic, its fall from grace has been cringe inducing. The business didn’t just lose over 70 percent of its value from its 2021 high – it’s now also flirting with the prospect of hitting lows not seen since the start of last year.
But regardless of its present woes, MRNA still offers plenty of upside from an investment point of view. The firm’s blockbuster product, the Spikevax, is expected to deliver $21 billion in sales this year – which, given that its total revenues for 2021 came to $18.5 billion, could see it hit a record top-line should things go to plan.
However, there’s more. Moderna’s R&D pipeline portfolio is also looking pretty impressive too. Although the firm only has one commercial product to date, it has heaps of other promising candidates in at least the Phase 2 or Phase 3 trial stage.
For example, MRNA is testing five flu vaccines at the moment, with two in preclinical development and one ready to enter Phase 3 trials.
Outside of the respiratory diseases space, the company has some other interesting medicines lined up too. There’s its mRNA-6231 therapeutic – the firm’s first autoimmune candidate that made it into clinical testing – as well as the personalized cancer vaccine, mRNA-4157, which, if successful, will be capitalized with Merck on a 50-50 global profit sharing basis.
Intriguingly, the company’s also working on a Cystic Fibrosis treatment that’s being developed in concert with Vertex Pharmaceuticals. It’s still early days yet, but with IND-enabling studies now underway, VXc-522 could deliver a hefty regulatory win for both MRNA and VRTX if it eventually proves successful.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.