This Stock Is Trouncing the Market in 2022 — and Its Prospects Just Got Even Better

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It’s hard to swim against the current, and investors these days definitely find the current going against them. Most stocks have fallen, with the S&P 500 index in correction territory and the Nasdaq Composite index in bear territory again.

However, not every stock is being swept in the wrong direction. Here’s one that’s trouncing the market so far in 2022. And its prospects just got even better.

Image source: Getty Images.

Firming up the monopoly

In 2012, Vertex Pharmaceuticals (VRTX 1.71%) became the first company to win U.S. approval of a drug that treated the underlying cause of cystic fibrosis (CF). That drug — ivacaftor (marketed as Kalydeco) — became the foundation for three other CF drugs that followed in its footsteps.

Vertex has achieved remarkable success in the subsequent years with a virtual monopoly in the CF market. The company’s sales totaled nearly $7.6 billion in 2021, up 22% year over year. As previously mentioned, the biotech stock has also handily beaten the market this year with a gain of nearly 20%.

That monopoly in CF now appears stronger than it did only a week ago. Why? AbbVie (ABBV 1.33%) announced in its first-quarter conference call last Friday that it’s throwing in the towel on developing a triplet therapy for treating CF. Chief Scientific Officer Tom Hudson stated that the efficacy of the experimental combination therapy didn’t meet the pre-specified efficacy criteria for continuing development.

Hudson added that AbbVie hopes to advance a new triple combo into phase 2 testing by early 2023. However, this news leaves Vertex still dominant in the CF market with no challenger anywhere close to being in a position to launch a rival product.

Vertex still has plenty of growth opportunities in CF. The company believes that it could capture another 30% of the market with its existing therapies. It also plans to file for approval later this year to begin clinical testing of an experimental messenger RNA therapy that could address the remaining 5,000 or so patients for whom its current drugs can’t help.

Forging new paths

Meanwhile, Vertex continues to forge new paths beyond CF. The company and its partner, CRISPR Therapeutics, should report results from a pivotal study of CTX001 in treating rare blood disorders sickle cell disease and transfusion-dependent beta-thalassemia within a few months. Assuming those results are positive, regulatory filings for the gene-editing therapy could be on the way before year-end.

Vertex recently advanced VX-147 into pivotal late-stage testing in treating APOL1-mediated kidney disease. There are around 100,000 people in the U.S. and Europe with this genetic disease. That’s even higher than the 83,000 individuals with CF.

The company also expects to begin pivotal clinical studies for its non-opioid pain drug VX-548 in the second half of 2022. In March, Vertex reported positive results from two phase 2 studies of the experimental drug in alleviating acute pain following abdominoplasty surgery and bunionectomy surgery.

The only negative for Vertex this year is that the U.S. Food and Drug Administration (FDA) recently placed a clinical hold on the phase 1/2 study evaluating VX-880 in treating type 1 diabetes (T1D). This move by the FDA caught Vertex by surprise. The company stated in a press release that it will work with the agency to address any concerns so the trial can resume as soon as possible.

Vertex’s T1D program could be a game changer. The company is on track to submit an Investigational New Drug application this year to advance additional T1D therapies into clinical testing. Vertex’s long-term aim is to cure the disease.

Potential for surprises

There’s always the potential for surprises with Vertex — both positive and negative. That’s a fact of life for any biopharmaceutical company. 

It’s possible that Vertex’s first-quarter results, scheduled to be announced after the market close on May 5, could be disappointing. The company could experience additional clinical setbacks.

However, the overall outlook for Vertex appears to be very good. The company has a promising pipeline and a robust and growing cash stockpile. And with the latest news from AbbVie, Vertex’s CF monopoly is stronger than ever.