Image: Vertex’s pipeline is impressive. We like its areas of focus and the progress it continues to make with key therapies in CRISPR and pain management.
By Brian Nelson, CFA
On June 8, it was announced that the Biologics License Applications (BLAs) for the investigational treatment exagamglogene autotemcel (exa-cel) for sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT) from two of our favorite speculative biotech entities Vertex Pharma (VRTX) and CRISPR Therapeutics (CRSP) have been accepted by the U.S. FDA. The submission received Priority Review for SCD, and exa-cel has the potential to be the first CRISPR gene-editing therapy to be approved. We continue to be huge fans of this technology and Vertex’s risk-adjusted exposure to the potential payoff via its partnership with CRISPR Therapeutics. Vertex remains a key idea in the Best Ideas Newsletter portfolio.
What Is CRISPR?
CRISPR gene editing technology can identify a specified portion of damaged DNA in a cell and alter that DNA, potentially replacing faulty genes. CRISPR stands for ‘Clustered Regularly Interspaced Short Palindromic Repeats’ and is built around the Cas9 protein, with the “Cas” proteins (meaning CRISPR-associated proteins) found in bacteria. Researchers have found that by adding a guide RNA and the Cas9 protein to a cell, the guided Cas9 protein is able to identify the desired DNA sequence that the researcher aims to edit.
Video: How CRISRP technology can alter DNA.
Vertex Pharma is a power play in biotech. First, the company has a lucrative and established cystic fibrosis [CF] franchise, and it looks like its position in that area will remain dominant given AbbVie’s (ABBV) recent failure and decision to abandon its CF-program. This means that, unlike many other speculative biotech peers, Vertex Pharma generates a tremendous amount of free cash flow and has an enviable net-cash-rich balance sheet. Second, its pipeline is fantastic. Not only does it have exposure to CRISPR, but we’re looking forward to some big things with respect to its non-opioid, non-addictive pain killer, the NaV1.8 inhibitor VX-548.
Image: Vertex’s VX-548 for acute pain could be a huge game-changer in the field of medicine.
The combination of robust financials and a tremendous pipeline of game-changing therapeutics from exa-cel to VX-548 makes Vertex Pharma a no-brainer idea for the Best Ideas Newsletter portfolio, in our view. Vertex Pharma’s shares are up nearly 18% so far in 2023, and we think its long term remains very bright. The company’s dominance in CF gives it moaty economic characteristics, while the possible launch of as many as five new products in the next five years offers tremendous promise. Vertex Pharma’s risk-reward situation continues to be skewed positively in investors’ favor.
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Tickerized for VRTX, CRSP, EDIT, SGMO, VERV, NTLA, DTIL, BEAM, XBI, ARKG, IBB, ABBV, TEVA, WBA, CVS, BLUE
Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, and RSP. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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