Vertex (VRTX) shot up 41% during intraday trading recently after a Cystic Fibrosis study concluded that 46% of patients had improved lung function after taking a combination of Kalydeco and the experimental VX-809 drug. The finding could boost the eligible patient pool by up to ten times.
Vertex focuses its research primarily on viral infections, autoimmune disorders, inflammatory diseases, and cancer. Due to newly patented drugs named Incivek and Kalydeco, that gained approval for sale in May 2011 and January 2012, Vertex should be able to grow revenue significantly. Vertex will likely be profitable in the years to come due to Incivek and Kalydeco.
Vertex’s Kalydeco was approved in early 2012. Kalydeco is the first drug to treat the causes of Cystic Fibrosis rather than just the symptoms. Cystic Fibrosis is a $3 billion to $4 billion market or 30,000 person market. In addition, Kalydeco is approved to treat a rare form of Cystic Fibrosis and should generate approximately $1.5 billion to $2 billion in worldwide revenue. The company is attempting to get all it can from the drug. Further, Vertex also plans to test Kalydeco in combination with other drugs, such as VX-809 currently in Phase II trials, to determine if it will fight a more common form of Cystic Fibrosis. If approved for additional uses, Kalydeco will provide incremental revenue for Vertex. I estimate additional revenue of $1.5 billion to $2 billion per year if everything works in Vertex’s favor.