Vertex Pharmaceuticals Will Use $100 Million to Tank Its Own Market Share. Here’s Why That’s a Smart Move.
2 min read
Hot off the approval of its gene therapy for a pair of rare hereditary blood disorders, Vertex Pharmaceuticals (NASDAQ: VRTX) will soon have another therapy up for approval, and the financial implications are massive. But they’re not massive just because it stands to crank out billions in additional revenue. Instead, the plan is to shell out the equivalent of $100 million so that the potential new drug can compete for the market share of one of its already commercialized medicines as soon as possible.
What’s going on here? It’s time to dig in and figure it out so that investors can decide what to do.
Is this good news actually bad news for shareholders?
Per the results of a phase 3 clinical trial reported Feb. 5, Vertex’s latest candidate for treating cystic fibrosis (CF), a rare and serious genetic disease of the lung, is both safe and effective. The medicine is currently called “vanza triple” because it combines the molecule vanzacaftor and two other drugs. One of the three compounds, tezacaftor, is already in one of the company’s medicines on the market, though the others aren’t.
In the clinical trial, the vanza triple combo performed at least as well as Trikafta, the biopharma’s best-selling product for CF. By one metric — how much the therapy reduced the level of detectable chloride in patients’ sweat — the combo was superior, and its side effect burden comparable. That poses an interesting problem.
In 2023, Trikafta was responsible for roughly $9 billion in sales from a top line of roughly $10 billion. If the new medicine gets approval from regulators at the Food and Drug Administration (FDA), which management plans to petition for by mid-2024, Vertex will have two products in direct competition with each other on the market simultaneously. There is likely not any opportunity for patients to take both therapies at once, and it is unclear whether there is a chance that a large group of patients will respond better to the older combination than the new one.
