As a follow-up to my January 2022 article on Vertex Pharma (VTRX), I listened to Reshma Kewalramani, the CEO of Vertex Pharma, as well as the rest of her management team on VTRX’s Q4 2021 earnings call.
The long and short of the news shared on the earnings call was that Vertex moved a step closer to its objectives in each area of its pipeline and did not have any negative results to report.
I am still bullish on this stock and think it is a good way to make a strong bet on a pharma pipeline that could revolutionize several different therapeutic areas including Sickle Cell Anemia and Cystic Fibrosis (CF).
Specific growth plans laid out on the call include reaching 83,000 more patients with CF by either increasing access to the current CF modulators (which could help address the needs of over 50,000 patients around the world), or by continuing to develop mRNA/small molecule therapeutics with partners Moderna and CRISPR Therapeutics.
Vertex also updated us on their plans for CTX001, its mRNA therapy that it is also developing with CRISPR to treat Sickle Cell and Beta Thalassemia. Kewalramani said that the study has been fully enrolled (with greater than 70 patients) and that Vertex is consulting with the USFDA on how best to present its data package to the agency.
Kewalramani also said that the company still expects to file its New Drug Application by the end of the year (2022).
The company also expects its APOL1-Mediated Kidney Disease small molecule treatment to begin a phase three clinical trial (that is also considered a pivotal clinical trial) by the end of 2022.
The last drug under development at Vertex that I will mention is VX-880 which will progress along two paths. The first is to enroll more patients in the study currently underway. The second is to file a second IND with the USFDA to also begin testing the Islet cell therapy along with a device, in a drug/device combination. This IND will be filed in 2022.
To quickly summarize how the company performed financially in 2021, it was able to increase revenues by more than $1.5 billion in 2021, increase net income by more than $600 million, and increase cash on hand by over $800 million (all for 2021 when compared to 2020).
Recent Results and Dividend
Vertex stock has been trading between $176.36 and $254.93 over the past year.
VRTX brought in revenues of $7.6 billion over the last 12 months and net income of $2.34 billion over the same period.
The company has reported fourth-quarter earnings of $3.37 per share, beating analyst estimates by $0.08. It has also reported $13.02 in earnings per share for 2021, beating analyst estimates $1.41.
VRTX currently does not pay a dividend.
The company has a very sound balance sheet. It has a current ratio of 4.46, so it has enough current assets on hand to pay their bills for the next four and a half years.
When I calculated the stock’s intrinsic value by modeling discounted cash flows, I pegged it at $427. I believe the company’s track record of outstanding research and development, as well as execution, will allow the company’s stock to reach its intrinsic value.
Wall Street’s Take
VRTX stock has a Moderate Buy consensus rating on TipRanks, based on 10 Buys, five Holds, and one Sell assigned in the past three months.
The average Vertex price target of $262.12 suggests 12% upside potential.
Conclusion
Based on VRTX’s pipeline, the company’s ability to conduct research and development and clinical trials, as well as execute well, I am very bullish about this stock for growth investors.
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