In this blog, we highlight two large-cap biotech stocks - Vertex Pharmaceuticals, Inc. VRTX and Alexion Pharmaceuticals, Inc. ALXN - that attracted investor attention last year and will likely remain in focus in the New Year as well.
Both Vertex and Alexion enjoy dominant positions in medical areas - cystic fibrosis (CF) for Vertex and ultra-rare disorders for Alexion - that are not very competitive. This puts these two companies in advantageous position to peers, which face rising competitive pressure.
Vertex markets two CF drugs, Kalydeco and Orkambi.
Year 2017 was a tremendous year for Vertex with positive data read-outs and regulatory approvals leading to an increase in eligible patient population for Kalydeco & Orkambi. With a consistent expansion in patient population, Vertex's CF product revenues increased through 2017.
The company is optimistic that the positive trend in CF sales will continue in 2018 as it gains additional reimbursement approvals for Orkambi in ex-U.S. markets and gets approval to launch tezacaftor (VX-661)/ivacaftor combination medicine.
The stock surged 103.4% in 2017, substantially outperforming the 4.4% increase registered by the industry . Estimates have also moved northward in the past 90 days, driven by the company's positive earnings surprises.
Vertex's CF pipeline is also quite strong with a broad portfolio of next-generation CF correctors. Vertex has also made decent clinical progress across multiple CF studies this year and has meaningful pipeline catalysts. Investor focus is on the triple combination CF regimens, which are crucial for long-term growth, as these have the potential to treat up to 90% of CF patients. Vertex plans to initiate pivotal phase III studies on up to two of the four triple combination regimens in the first half of 2018.
Alexion is focused on the development and commercialization of life-transforming drugs for the treatment of patients with ultra-rare disorders. Its key drug, Soliris, approved for two severe and ultra-rare blood disorders - paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS) - has been consistently doing well.
Meanwhile, Alexion is working on expanding the drug's label to include additional indications, which if approved, can boost further sales growth. In October, the FDA approved Soliris to treat refractory generalized myasthenia gravis (gMG) who are anti-acetylcholine receptor (AchR) antibody positive.
It has two other drugs for rare diseases called Strensiq and Kanuma, which are emerging as growth drivers. Alexion also has a robust pipeline of several candidates under development including Soliris follow-up candidate, ALXN1210. Data from some key studies on ALXN1210 are expected to be presented this year.
Though Alexion's share price declined slightly last year, estimates moved northward in the past 90 days while the company consistently delivered positive earnings surprises.
With a strong product portfolio and consistently successful pipeline development, Vertex and Alexion will likely attract investor attention this year in an industry that struggles with increasing pricing and competitive pressure. Also, both the companies are viewed as attractive acquisition targets for larger companies.
Both the companies have a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.