VRTX Stock Breaks Out To A Record High: The Surprising $5 Billion Opportunity

Almost three-quarters of prescribed pain meds are opioids, and Vertex Pharmaceuticals (VRTX) could change that, an analyst said before VRTX stock broke out to a record high Thursday.


Leerink Partners analyst David Risinger drew parallels between the drug development arc for obesity drugs and pain treatment. Investors have long ignored the opportunity in treating pain due to a history of failures — similar to obesity treatment.

But the advent of new weight-loss drugs has investors laser-focused on obesity treatment. And soon, the same could happen for meds that treat pain.

There are certainly risks. Vertex’s drug, dubbed VX-548, only showed a modest impact on pain when compared to a placebo in midstage testing — not the outsized impact drugs from Novo Nordisk and Eli Lilly have had on weight loss.

“Many investors haven’t contemplated the fact that pain drugs are the largest category of prescription drugs,” Risinger said in a note to clients. “And there remains significant unmet need given (central nervous system) side effects of approved therapies.”

Risinger reiterated his 442 price target and outperform rating on VRTX stock.

VRTX Stock: An Alternative To Opioids

Vertex is testing its drug in people with acute and neuropathic pain.

Traditionally, pain treatment has involved the use of opioids. But patients can become addicted to opioids over long-term use. They also tend to cause constipation. Meanwhile, over-the-counter meds like acetaminophen carry liver risks. And ibuprofen is tied to gastrointestinal and cardiovascular risks.

Still, according to Iqvia, 74% of pain prescriptions this year have been for opioids. As of July 14, there were roughly three times the number of opioid prescriptions as there were nonnarcotic prescriptions.

But Vertex is using a different mechanism that targets channels in the peripheral nervous system to interrupt pain signals before they reach the brain. This promises to have a better side-effect profile and could ultimately stoke VRTX stock even more.

RBC Capital Markets analyst Brian Abrahams says there’s a “solid rationale” behind Vertex Pharmaceuticals’ approach. Vertex could add $340 million in worldwide sales of VX-548 in acute pain treatment. The chronic pain market could be worth a much bigger $2.6 billion, he said.

In late September, Abrahams raised his price target on VRTX stock to 348 from 343. But he kept his sector perform rating on shares, noting, the “reward/risk still seems balanced here.”

Final-Phase Studies Underway

Vertex expects to have the results of three Phase 3 studies in acute pain treatment in the next several months, Risinger said. Vertex tested the treatment in people following abdominoplasty — a procedure commonly known as a “tummy tuck” — or bunion removal.

The third study is examining the drug’s impact over two weeks in other types of moderate to severe acute pain.

Vertex is also studying its drug in people with chronic neuropathic pain. Neuropathic pain includes sources of nerve pain, like tic douloureux. Tic douloureux is a chronic pain disorder involving sudden, severe facial pain. But Vertex will unveil the results in neuropathic pain separately.

Risinger says the acute pain treatment market could be worth $5.1 billion in 2030. But VRTX stock analysts have a lower $1.5 billion estimate for Vertex’s pain treatment that year. Still, there remains an “extraordinary need” for alternatives to opioids in pain management.

“The fact that three-quarters of total prescriptions are narcotics suggests a huge opportunity for an equally (effective) oral non-opioid therapy,” he said.

VRTX Stock Hits A Record High

Vertex Pharmaceuticals broke out of a flat base with a buy point at 367 on Thursday, MarketSmith.com shows. Shares closed up 0.8% at 368. The move came despite downward pressure on the broader biotech industry group. Collectively, shares toppled 2.5%.

VertexBullishly, VRTX stock has a strong Relative Strength Rating of 89 out of a best-possible 99. The RS Rating is a 1-99 measure of a stock’s 12-month performance. This puts Vertex stock in the top 11% of all stocks, according to IBD Digital.

Shares also have a strong Composite Rating of 93, which tracks a stock’s fundamental and technical metrics. Notably, VRTX stock also lands on IBD’s Tech Leaders list.

Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.


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