Why This Biotech Company Could Be a Growth Stock Powerhouse

Key Points

• This biotech is a leader in the treatment of cystic fibrosis, and that’s helped earnings explode higher over the years.

• The company recently launched a new product that could be the start of a multibillion-dollar business.

• 10 stocks we like better than Vertex Pharmaceuticals ›

When you think of adding growth to your portfolio, you may immediately envision technology stocks. After all, names like Nvidia and Meta Platforms have driven stock market gains over the past couple of years. Technology stocks are fantastic growth players, but it's important to remember that they aren't the only option for growth-oriented investors.

Another industry that offers you a chance to supercharge your portfolio is biotech. Here, you'll find the potential security of healthcare -- people need their medicines, and this supports drugmakers' revenue -- along with incredible innovation. Biotech players are known for transforming the lives of patients with game-changing treatments, and this may lead to soaring revenue over time.

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A great example of this is a company that's revolutionized the treatment of cystic fibrosis (CF), meaningfully extending patients' lives and delivering revenue growth quarter after quarter. And this company also has proven its innovation strengths in recent years by diversifying into other treatment areas. All of this could make this player a growth stock powerhouse over the long run. Let's check it out.

Image source: Getty Images.

Vertex's earnings take off

The biotech company I'm referring to is Vertex Pharmaceuticals (NASDAQ: VRTX), the world's leading maker of CF treatments. Vertex first introduced its CFTR modulators back in 2012, and this prompted the company's earnings to take off -- and revenue has been climbing ever since. (Vertex also has rewarded long-term investors, as the stock has climbed about 190% over the past decade.)

VRTX Revenue (Annual) data by YCharts

In CF, symptoms are caused by a malfunctioning protein produced by the CFTR gene. CFTR modulators aim to fix the faulty protein. The challenge is different genetic mutations in the disease result in different flaws in the protein -- so one particular medication won't work for every patient. But, back in 2019, Vertex won approval for Trikafta, a treatment that may be used for up to 90% of CF patients. The company's latest CF drug, approved late last year and called Alyftrek, handles an additional 31 mutations and has resulted in even greater efficacy than Trikafta.

Blockbuster Trikafta continues to drive CF revenue, as patients doing particularly well on that drug may stick with it, but Alyftrek is on the road to becoming another significant revenue driver for the company. Vertex is also shepherding other potential CF drugs through the pipeline, so it's logical to expect this company to remain the leader in this field for quite some time.

And, as mentioned, in recent times, Vertex has successfully expanded into other treatment areas. The company launched blood disorders gene editing treatment Casgevy last year, and this year released Journavx in the high-potential area of pain management.

Casgevy's launch

Casgevy, a treatment that involves developing authorized treatment centers and a months-long process of steps such as cell collection and editing, will take some time to generate significant revenue for Vertex -- it's not like launching a simple pill. But Casgevy is on track to become a meaningful part of the Vertex story. In the latest earnings report, Vertex said 115 patients have undergone the cell collection process and 29 have received their Casgevy.

As for Journavx, from its launch in March through mid-July, pharmacists filled more than 110,000 prescriptions for it for acute pain. The company expects this non-opioid pain drug to meet the need for a treatment that's more efficacious than over-the-counter products but isn't linked to addiction like prescription opioid medicines. In the recent earnings call, Vertex said it's in the "early days of creating another multibillion-dollar franchise."

Potential new products on the horizon

Finally, Vertex has four programs in pivotal development and is about to start a fifth -- at this stage, these programs are approaching the crucial step of regulatory review. These include candidates for kidney diseases, IgA nephropathy and APOL1-mediated kidney disease, two studies within the pain management program, and a type 1 diabetes candidate.

Of course, anything can happen at any stage in a clinical trial, so it's possible that even during this late phase of development, Vertex could hit a stumbling block. But, even if that happens for one or two candidates, Vertex is still well-positioned to progressively expand its number of commercialized drugs and treatment areas. This, along with the ongoing strength of its CF program, makes me confident about its ability to deliver revenue growth in the years to come -- and that makes Vertex a growth stock powerhouse to buy now.

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Adria Cimino has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Meta Platforms, Nvidia, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.