McKesson Corporation’s MCK dedicated business focused on supporting the commercialization of cell and gene therapies, InspiroGene, has been selected by Vertex Pharmaceuticals Incorporated VRTX to expand commercial distribution options for CASGEVY. InspiroGene will partner with Vertex to expand distribution options for CASGEVY.
CASGEVY (exagamglogene autotemcel), the first CRISPR-based gene-editing therapy approved by the FDA, is indicated for the treatment of patients 12 years and above with sickle cell disease (SCD) with recurrent vaso-occlusive crises or transfusion-dependent β-thalassemia.
The availability of the FDA-approved drug is expected to significantly solidify McKesson’s foothold in the SCD treatment space.
Likely Trend of MCK Stock Following the News
Following the announcement on Nov. 14, shares of the company lost nearly 0.6% till yesterday.
Historically, the company has gained a high level of synergies from its various partnerships. Although the latest tie-up to expand commercial distribution options for VRTX’s CASGEVY is likely to be beneficial for MCK’s top-line growth going forward, the stock declined overall since the announcement despite a slight gain since Monday.
McKesson currently has a market capitalization of $78.85 billion. Its projected earnings per share growth of 18.5% is higher than the industry’s 7.5%. In the last reported quarter, MCK delivered an earnings surprise of 2.6%.
Rationale Behind McKesson’s Partnership
Per MCK’s management, SCD (a rare and life-threatening blood disorder) presents significant unmet needs. The partnership with Vertex is expected to enable to provide CASGEVY to patients in need, along with advancing future medicines. Management believes that by leveraging its extensive supply chain expertise and customer-centric approach, the company’s cell and gene therapy business will likely support innovative medicines advance from clinical development to commercial success.
InspiroGene will serve a dual role of leveraging Biologics By McKesson specialty pharmacy and McKesson Plasma & Biologics specialty distributor.
Industry Prospects in Favor of MCK
Per a report by Grand View Research, the global SCD treatment market was estimated at $2.75 billion in 2023 and is anticipated to witness a CAGR of 15.7% between 2024 and 2030. Factors like increasing disease awareness, advancements in medical research and technology, and a growing need for effective treatments are likely to drive the market.
Given the market potential, the latest partnership is expected to solidify McKesson’s foothold in the niche space.
McKesson’s Recent Partnerships
This month, McKesson’s oncology technology and insights business, Ontada, announced a strategic collaboration with health data platform, Datavant, to include Ontada’s data in their health ecosystem. The collaboration aims to help life science companies access Ontada’s real-world data, accelerating the discovery of critical insights that drive oncology innovation and improve the lives of cancer patients.
Last month, McKesson’s Ontada announced its collaboration with Microsoft to utilize Azure AI, including Azure OpenAI Service, to help efficiently process more than 150 million unstructured oncology document components. The collaboration is expected to significantly improve the ability for Ontada to extract crucial clinical information.
In September, McKesson’s independent specialty pharmacy specializing in oncology and rare disease areas, Biologics by McKesson, was selected by Servier as a limited specialty pharmacy provider for VORANIGO (vorasidenib) for the treatment of adult and pediatric patients 12 years and older with Grade 2 astrocytoma oroligodendroglioma with a susceptible isocitrate dehydrogenase-1 (IDH1) or isocitrate dehydrogenase-2 (IDH2) mutation following surgery including biopsy, sub-total resection, or gross total resection.
MCK’s Share Price Performance
Shares of the company have gained 35.8% in the past year compared with the industry’s 7.8% rise and the S&P 500's 30% growth.
Image Source: Zacks Investment Research
McKesson’s Zacks Rank & Key Picks
Currently, MCK carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the broader medical space are Cardinal Health, Inc. CAH and Cencora, Inc. COR.
Cardinal Health, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 11.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health’s shares have gained 13.7% compared with the industry’s 7.8% rise in the past year.
Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 10.1%. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average being 6.9%.
Cencora has gained 21.8% against the industry’s 3.9% decline in the past year.
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