Is This Biotech Bull Run Out Of Steam?

Vertex Pharmaceuticals (VRTX) has been crushing it. They're a powerhouse in the healthcare game, no doubt.

But with that stock price shooting for the moon and a $100 billion valuation, it's got me asking: Is this ride getting a little too rich for our blood? Is it time to cash out and look for greener pastures, or is there still some juice left in Vertex's tank?

Let's take a look at why the Vertex bulls are so pumped.

The company's a giant in cystic fibrosis – no argument there. Their drug Trikafta/Kaftrio is practically printing money, raking in a whopping $8.9 billion last year. Sure, things slowed a bit in 2023, but hey, that's still serious cash.

But here's the thing: If Vertex was just about cystic fibrosis, the price tag could make a careful investor go "Whoa, Nelly!"  Growth investors, though, see a bigger picture, a company ready to branch out and rake in even more dough.

Take the recent FDA approval for Casgevy, the gene therapy treatment Vertex developed with CRISPR Therapeutics (CRSP). This thing could be HUGE for treating blood disorders like sickle cell disease. In fact, its potential peak sales are projected at $3.9 billion — and even with Vertex splitting the profits, that's a juicy opportunity.

Another potential blockbuster is Vertex's non-opioid painkiller, VX-548. The results so far are looking good, and it’s pegged to become a $5 billion moneymaker. Think about the opioid mess we're in – a safe, effective alternative could be massive.

We need to be patient with VX-548 though. It's not approved yet, but it's definitely one to watch. Vertex is aiming to file for approval around the middle of this year, specifically for treating those nasty post-surgery pains.

Aside from these, Vertex is setting its sights on other serious unmet needs. Take APOL1-mediated kidney disease. This nasty condition lurks in the shadows until BAM, your kidneys are about to bail on you. Signs like protein in your urine and swelling mean it might be too late.

But, Vertex has a potential solution up its sleeve: inaxaplin. Early trials look promising, with patients seeing major improvement. The results were so good that they're even going to start testing it in younger patients.

Could inaxaplin be another game-changer? Well, Vertex thinks it could help at least 100,000 patients in the US and Europe – that's even more than the number of people with CF they already serve.

And, get this: There's NO approved treatment for the root cause of this kidney disease. If Vertex wins this race, it could turn into a blockbuster franchise to rival its lucrative CF success.

On top of these candidates, Vertex recently scooped up Alpine Immune Sciences (ALPN), and that move shows just how serious they are at adding more firepower to their pipeline. And, if Alpine's drug makes it through those big Phase 3 trials – the ones set to start soon – Vertex could end up being worth a LOT more than the $4.9 billion they shelled out.

For context, let's break down what Alpine does. They're all about those fancy protein-based immunotherapies, fancy words for treatments that target the immune system for autoimmune and inflammatory diseases. While their drugs are still in the testing phase, one called povetacicept looks especially promising for autoimmune kidney diseases like IgA nephropathy.

Translation: Alpine's got some traction towards treating these nasty kidney diseases. They've finished Phase 2 trials and are gearing up for the big leagues: Phase 3. That's where they test the drug on a whole bunch of patients, comparing it to a placebo, to get the data that could make regulators give the thumbs up for market launch.

With all these in mind, let’s talk about the elephant in the room: Is Vertex overpriced?

The stock's been on a tear, rocketing up 90% in just three years. And at those hefty multiples – 29 times earnings, 11 times revenue – it sure doesn't look cheap.

But, if you believe in the promise of Vertex's future, things look a little different. Check out that PEG ratio – a measly 0.5. That's a bargain hunter's dream, especially for a stock with so much growth potential.

So, what should you do: buy, sell, or hold Vertex? Well, this stock's got growth potential and it's not so insanely expensive that you gotta dump it today. If you already own it, hang tight – it doesn't look like disaster's lurking around the corner.

The bigger question is for those of you who missed the boat. Is it worth jumping on now?

As long as you're in it for the long haul, Vertex could still make you a nice pile of cash. Keep an eye on those VX-548 regulatory filings – if Vertex is moving ahead, they're probably feeling good about the drug's chances. And with Casgevy getting the green light for multiple uses, Vertex already has a shiny new revenue stream alongside its cystic fibrosis powerhouse.

So while the stock price might make you wince, don't discount the long-term potential. This biotech bull might take a breather every now and then, but the race has just begun. I suggest you buy the dip.