Vertex stock nose-dived Tuesday after the biotech company said it wouldn't advance its next-generation pain drug into additional testing.
The decision follows a lackluster midstage study in which the drug, dubbed VX-993, missed its mark in patients with acute pain following a bunion removal. Vertex Pharmaceuticals said it won't run additional tests of VX-993 as a solo treatment for acute pain.
Further, following discussions with the Food and Drug Administration, Vertex said it doesn't see a path forward in acute pain treatment for its approved pain drug, Journavx, as a treatment for broad neuropathic pain. Instead, the company will focus on diabetic neuropathy, a smaller 20% piece of the overall chronic pain market. The drug is already approved as a treatment for moderate to severe acute pain in adults.
The news "will likely dampen exuberance around how easily VRTX will be able to capture the broadest pain revenue opportunity," RBC Capital Markets analyst Brian Abrahams said in a report. Analysts had valued the pain opportunity at $25 billion.
On today's stock market, shares skidded 20.6% to 374.98. Vertex stock undercut its 50-day and 200-day moving averages, but remained within a consolidation with a buy point at 519.88, MarketSurge shows.
Vertex Stock Tied To Key Launches
The setback overshadowed a strong second-quarter report.
Abrahams said Vertex's suite of cystic fibrosis treatments continues to provide a backbone for the company. Meanwhile, Vertex is in the middle of launching Journavx, a new cystic fibrosis drug called Alyftrek and Casgevy, a gene-editing treatment for two blood diseases developed with Crispr Therapeutics.
But with those launches "unlikely to move the needle for some time and the next wave of key clinical data still some ways away, (it) could be hard for shares to rebound as quickly as they historically have," he said.
Abrahams slashed his price target on Vertex stock to 405 from 430, but kept his sector perform rating.
Strong Second-Quarter Report
Across all products, Vertex reported $2.96 billion in second-quarter sales, up 12% and ahead of expectations for $2.91 billion, according to FactSet. The company also came in with adjusted profit of $4.52 per share, reversing from a year-earlier loss and beating calls for a gain of $4.27.
Alyftrek brought in $157 million in its second full quarter on the market, beating the broad view for $136 million, but missing William Blair analyst Myles Minter's forecast for $163 million. Journavx, though, brought in a "very modest" $12 million in sales, Needham analyst Joseph Stringer said in a report to clients. Casgevy generated $30 million in sales, up from $14 million in the first quarter.
Minter, the William Blair analyst, noted analysts are closely watching prescriptions of Journavx. There have been more than 110,000 scripts written and filled across hospital and retail settings since early March. But most data sources include only retail information and not hospital utilization.
"Accordingly, these do not paint a full picture of the ongoing launch," Minter said.
Vertex notes 150 million people have insurance coverage for Journavx. That includes formal coverage agreements with two of the three largest pharmacy benefit managers and unrestricted access within 16 state Medicare plans.
For Casgevy, Needham's Stringer noted about 115 patients have started the process to receive Casgevy, up from roughly 90 at the end of the first quarter. Casgevy is a bespoke gene-editing drug, developed from a patient's own extracted cells. So far, 29 patients have received the drug, including 16 in the second quarter.
Stringer models $89 million in 2025 sales of Casgevy, up from his prior estimate for $74 million.
But he kept his hold rating on Vertex stock.
Next Readout Isn't Until 2026
Leerink Partners analyst David Risinger also slashed his price target on Vertex shares to 458 from 503.
The two pain drug setbacks announced late Monday will likely limit the long-term sales potential of Vertex's plan to develop additional nonopioid pain treatments. And the next catalyst is an interim look at a study of Vertex's IgA nephropathy treatment in early 2026. IgA nephropathy is a kidney disease.
For the year, Vertex continues to expect $11.85 billion to $12 billion in sales. Analysts projected $17.91 earnings per share and $11.93 billion in sales.
The company also announced Chief Scientific Officer David Altshuler will retire next August. As part of a planned transition, Mark Bunnage, senior vice president of global research, will take the CSO reins on Feb. 1.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
