Vertex Pharmaceuticals (NASDAQ: VRTX) has long been known as the company to turn to for life-saving cystic fibrosis (CF) drugs, and this platform has helped it generate billions of dollars in earnings. But Vertex now is showing that it also can be a game changer when it comes to treating one of the most common of health problems -- pain.
The biotech just won regulatory approval for Journavx (formerly known as suzetrigine) for the treatment of acute pain -- the sort of pain you may have after an accident or surgery. The charm of this drug is it delivers excellent pain control without the addiction risk associated with opioid painkillers. The prescription of opioids has resulted in a significant burden for the U.S. healthcare system, with the opioid crisis costing $631 billion from 2015 through 2018, according to a Society of Actuaries report.
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Today, with this new Vertex option available, is this biotech player a no-brainer buy?
Image source: Getty Images.
The problem with opioids
First, a bit of background on the pain-drug environment in the U.S. so far. Options have been limited to over-the-counter medicines that sometimes aren't efficacious enough or may lead to side effects -- such as liver toxicity in the case of acetaminophen -- and opioid drugs that became immensely popular in the 1990s.
Opioid prescriptions peaked in 2010, according to the Centers for Disease Control and Prevention, then declined in the following years through 2015, but doctors continue to widely prescribe them today. The problem with opioids, as mentioned above, is that they've led to addiction and death, and that ultimately has created an emotional burden for patients and their families, and a financial one for the country.
Now let's move on to Vertex's news. The company aims to fill the gap between these two painkiller options with Journavx. As a pain-signal inhibitor, it blocks pain signals -- and does this at the level of the peripheral nervous system and not in the brain, offering patients a strong safety profile. The U.S. Food and Drug Administration (FDA) approved the drug for use in acute pain, but Vertex aims to eventually win approval in chronic pain, too. Clinical trials are ongoing, and the biotech said it could become a multibillion-dollar product.
A well-prepared launch
Vertex has heavily prepared for the launch of Journavx. (It's important to remember that as the leader in the CF market, with several commercialized drugs, Vertex is very experienced when it comes to drug launches). In the latest earnings report, the company said its goals for this year include ensuring broad access for patients and doctors, so opting for Journavx will be a smooth and easy experience for them. Two moves include gaining national retail distribution and creating copay assistance programs for patients.
One headwind that could slow the uptake of the Vertex pain drug, though, is cost. The list price is $15.50 per pill, which translates into $31 per day for the treatment. Opioid prices generally are lower, but they do vary.
That said, two things could support the uptake of Journavx. One is the company's efforts to make the drug affordable, for example, offering a savings program that allows eligible patients to pay as little as $30 dollars for a 30-day supply.
Second, a government-supported move away from opioid painkillers also could offer Vertex a boost. The NoPain Act took effect last month, offering additional payments to healthcare facilities for certain non-opioid options.
Is Vertex a buy?
Considering all of this, is Vertex a buy right now? It's true that, in spite of the general desire to replace opioids with safer options, Vertex could face headwinds if immediate cost truly is the priority. But I don't expect this to be a major challenge.
In a recent survey commissioned by Vertex, including more than 500 healthcare providers and 1,000 patients, results suggested that both groups would prefer non-opioid options. About 78% of providers expressed concern about the risk of opioid addiction when treating patients for acute pain -- and two-thirds of patients said they would opt for a non-opioid if given the choice.
Vertex stock today trades for about 24x forward earnings estimates. This is higher than in recent weeks but still very reasonable, considering Vertex's solid CF business and this new opportunity ahead -- which should reach well into the billions of dollars.
The company is in the early days of a new and exciting growth story. That's why, following this recent FDA approval, Vertex stock makes a no-brainer biotech stock to buy and hold for the long term.
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Adria Cimino has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
