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Why Vertex pharmaceutical stocks are collapsing today



What happened

Shares of a specialist in rare diseases Vertex Pharmaceuticals 09.30 NASDAQ: VRTX fell as much as 15.7% in pre-trade on Thursday morning. Today, biotechnology stocks are under pressure due to a safety alert observed in a mid-level study of the low-molecular-weight drug VX-814 as a potential treatment for alpha-1 antitrypsin deficiency (AATD).

In particular, drug development was discontinued after several patients in the study showed elevated liver enzymes. AATD is a genetically based condition associated with an increased risk of lung and liver disease.

Drop-down stock chart superimposed on columns with blue numbers

Image source: Getty Images.

And what

If this double-digit decline in market trading continues, Vertex will lose approximately $ 10 billion in market capitalization today. While the VX-814 looked like a decent revenue-generating company, the truth is that this drug was likely to face stiff competition as an AATD treatment.

Biotechnology such as Arrowhead Pharmaceuticals,, Alnylam Pharmaceuticals, and Degraded pharmaceutical products eventually developing competitive AATD therapies. Vertex’s sharp withdrawal today, in turn, seems to be a shareholder’s concern about the company’s cystic fibrosis assets – a market in which it has a virtual monopoly – rather than about this rare clinical crisis.

Now what

However, Vertex does not throw the towel on the AATD. Biotechnology said in the same press release that its other mid-level candidate, the VX-864, remains on track to provide first-class data sometime in the first half of 2021. It is important to understand that the VX-864 is structurally different from the VX-814. – which means that this clinical failure should not be taken as a preview of the upcoming VX-864.




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