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Why Is Vertex Pharma (VRTX) Stock Soaring This Year?


Vertex Pharmaceuticals, Inc.’s VRTX share price tanked 41.5% in 2016, underperforming a decline of 27.1% for the Zacks-classified Biomedical-Genetics industry. Though Vertex’s shares declined in 2016, they have picked up well in 2017. This year so far, Vertex’s shares have risen 57.8%, outperforming the increase of 1.3% for the Zacks classified Large-Cap Pharma industry.

Vertex’s main therapeutic area of focus is cystic fibrosis (CF). Presently, the companymarkets two medicines for the disease – Kalydeco and Orkambi, both of which enjoy blockbuster potential. The CF market represents huge commercial potential. It is a rare, life-threatening disease estimated to affect about 75,000 people in North America, Europe and Australia.

In the first quarter of 2017 (results reported in April), Vertex beat expectations for both earnings and revenues in Q1 as sales of both its CF drugs rose.

Vertex’s efforts to get both Kalydeco and Orkambi approved in additional indications are also encouraging. Label expansion will increase the eligible patient population for these drugs and thus boost their sales.

Vertex’s CF pipeline is quite strong with a broad portfolio of next-generation CF correctors which could bring in multi-billion dollar sales for the company, if approved.

Vertex is evaluating CF corrector tezacaftor (VX-661) – in combination with ivacaftor. The ivacaftor- tezacaftor combination is in phase III development (three studies are ongoing). In March, Vertex announced positive data from two phase III studies – EVOLVE and EXPAND. Both studies have met their primary endpoints and demonstrated statistically significant improvements in lung function in patients with CF. Based on positive outcomes from the studies, the company is planning to submit regulatory applications in the U.S. and EU in the third quarter of 2017.

Vertex is also evaluating some next-generation CFTR correctors (VX-152, VX-440, VX-659 and VX-445) as part of a triple combination with tezacaftor and ivacaftor. Investor focus will now be on these triple combination regimens, which are crucial for long-term growth at Vertex. Data from three triple combination regimes in CF patients are expected in the second half of this year.

Meanwhile, the company is also looking to buy CF candidates, which can be combined with its tezacaftor (VX-661) and Kalydeco to create triple combinations.

In March, Vertex announced a definitive deal to buy the worldwide development and commercialization rights of Concert Pharmaceuticals’ CNCE CF pipeline candidate, CTP-656 for an upfront payment of $160 million in cash.

Vertex plans to develop CTP-656 for potential use in future once-daily regimens in combination with its other pipeline drugs to treat the underlying cause of CF.

Vertex carries a Zacks Rank #3 (Hold). Better-ranked stocks in the pharmaceutical sector are Akari Therapeutics, Plc AKTX and VIVUS, Inc. VVUS, both with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Akari Therapeutics have risen 28.4% this year so far.

Loss estimates for Vivus for 2017 have narrowed by 22% over the past 30 days. The company has delivered an average positive earnings surprise of 233.63% over the past four quarters.

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