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IBD Stock Of The Day

IBD Stock Of The Day: How A Eureka Moment In Diabetes Bolstered Vertex Pharma

Vertex Pharmaceuticals (VRTX) is the IBD Stock Of The Day after promising test results in diabetes sent VRTX stock closer to a breakout Tuesday.

The company is testing a replacement for pancreatic cells known as islets. Islet cells help produce insulin, but don’t function properly in patients with type 1 diabetes. This leads to dangerous spikes in blood sugar. It’s important to note, the program is currently on pause in the U.S. while the Food and Drug Administration reviews dosing information.

Roughly nine months after receiving Vertex’s treatment, one patient no longer needed insulin shots or a pump. At five months, another patient had a 30% reduction in external insulin needed. Both received a half-sized dose while Vertex assesses the drug’s safety, Chief Financial Officer Charles Wagner said in an interview. The company has also dosed a third patient.

Both patients also showed increases in the amount of time their blood sugar was in the desired range. Dr. Camillo Ricordi called the results “remarkable and encouraging.” Ricordi is the director of the Diabetes Research Institute and Cell Transplant Center at the University of Miami Miller School of Medicine and is the steering committee chair for the Vertex study.

“As a treating physician, I have seen the profound burden of this disease on patients, especially those who experience severe (low blood sugar),” he said in a written statement. “The ability to restore a patient’s islet function and improve glycemic control, and subsequently reduce (external) insulin dependence, has significant potential to improve patients’ lives.”

On the stock market today, VRTX stock advanced 1.4% to 271.86.

VRTX Stock: Reducing Insulin Needs

The news is bullish for Vertex, which is looking to move beyond its bread-and-butter treatments for the lung disease cystic fibrosis.

Its most advanced effort is a gene-editing approach to sickle cell disease and beta thalassemia with Crispr Therapeutics (CRSP). But Vertex is also testing treatments for pain as well as kidney and liver diseases.

Vertex studied its islet replacement therapy in people with type 1 diabetes, a genetic disease. The islet cells were created in a laboratory — a process known as allogeneic — rather than using donor cells. Donor cells are often damaged or there’s not enough of them, CFO Wagner said.

“We are the only company that’s able to produce these cells at an industrial quantity,” he told Investor’s Business Daily. “One of the keys to be able to unlock this disease area is to be able to produce fully functioning cells at industrial quantities. We have shown we can do that so that is one of the distinctive parts of our program.”

Before treatment, the first patient needed 34 units a day of external insulin and had blood sugar in range 40.1% of the time. About nine months after treatment, the patient’s glucose was in range 99.9% of the time. The patient no longer needed external insulin.

The second patient’s blood glucose was in the proper range 35.9% of the time on 25.9 daily units of external insulin. After about five months, the patient’s blood sugar was in range 51.9% of the time with a 30% reduction in the amount of additional insulin needed via shots or a pump.

Bullishly for VRTX stock, the treatment has been well tolerated in patients to date. Most of the side effects have been mild or moderate.

Shares Eye A Buy Point

Shares are currently forming a cup-with-handle base with a buy point at 276.10, according to MarketSmith.com.

Also promisingly, VRTX stock has high ratings across the board at IBD Digital. Shares have a strong Composite Rating of 94, putting them in the top 6% of all stocks in terms of fundamental and technical measures.

Further, Vertex shares have a Relative Strength Rating of 95. This means VRTX stock has performed in the top 5% of all stocks in terms of 12-month performance.

Vertex is also highly profitable. In the second quarter, analysts expect the company to earn $3.54 per share on $2.13 billion in sales. Earnings would rise nearly 14% and sales would increase about 19%, according to FactSet. As a result, VRTX stock has an EPS Rating of 97 out of a best-possible 99.

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