Vertex Pharmaceuticals(NASDAQ: VRTX) is the global leader in cystic fibrosis (CF) treatment, and that specialty has helped it generate billions of dollars in earnings. But the company has also spent the past few years developing candidates outside of this treatment area, in an effort to become a well-diversified biotech player.
In fact, Vertex's next product to market may be one that could treat one of the most common problems around -- pain -- and generate blockbuster revenue. The company aims to submit that candidate, VX-548, for regulatory approval by the middle of this year. Meanwhile, though, a young biotech has jumped out of stealth mode to land in the limelight -- and has announced its development of a very similar pain candidate.
Latigo Biotherapeutics recently scored $135 million in Series A financing to help it bring its candidate through phase 1 trials. Could this news hurt Vertex's prospects in the billion-dollar pain market? Let's find out.
Image source: Getty Images.
The problem with today's painkillers
First, let's talk about why commercializing a non-opioid pain treatment is such a big deal. Today, over-the-counter non-opioids often aren't strong enough to manage high pain levels, or they can cause serious side effects, such as the liver toxicity associated with acetaminophen. Even worse, prescription opioids, though effective, have been linked to addiction.
At the same time, the pain management market is huge and growing, expanding at a compound annual growth rate of 4.5% to potentially reach more than $108 billion by 2032, according to Global Market Insights. So, it's clear a new candidate that could beat today's drugs when it comes to safety, and at least equal today's drugs when it comes to efficacy, could win -- and even reach blockbuster status.
Now, let's consider the Vertex and Latigo pain candidates. They both address the problem in the same way, by targeting NaV1.8, a sodium channel that plays a key role in pain signaling.
Vertex recently reported positive pivotal trial data for VX-548, with the candidate meeting both of its primary endpoints. Patients taking VX-548 saw statistically significant improvement in pain versus those taking placebo, and the candidate also produced a clinically meaningful reduction in pain. Importantly, VX-548 showed that it could be effective in a wide range of pain conditions -- from surgical to those unrelated to surgery.
The only area where Vertex fell short is in proving that VX-548 is superior in efficacy to the combination of hydrocodone bitartrate (an opioid) with acetaminophen -- the most frequently prescribed opioid combination. I don't see this as a major problem, though. Considering the addiction risk associated with opioids, a non-opioid that works just as well shouldn't have difficulty gaining market share.
Latigo's pain candidate
Latigo's candidate, LTG-001, is currently involved in a phase 1 trial, and the company's financing round should help support development. If all goes well, the biotech aims to seek approval in both chronic and acute pain, the same areas Vertex's candidate is addressing.
Vertex first is going for a broad moderate-to-severe acute pain approval this year, then later will aim for approval in peripheral neuropathic pain, or chronic nerve pain. The company recently reported positive phase 2 data in a trial for diabetic peripheral neuropathy, so the next step should be a pivotal trial.
Now, let's get back to our question: Could Latigo's entrance represent a threat to Vertex? The answer is no -- for several reasons.
First, Vertex is much closer to commercialization. If all goes well, the company could gain the first-to-market advantage.
Second, Vertex is a well-established, profitable company, and has the manufacturing, logistics, and sales infrastructure to hit the ground running if VX-548 wins approval. The company has experience launching new products, and this should serve it well as it expands from CF into other areas.
Finally, the market is big enough for more than one player to succeed. So, if a new entrant like Latigo crosses the commercialization finish line a few years from now, it could carve out some market share -- without necessarily disrupting Vertex.
All of this means Vertex investors shouldn't worry about the big biotech's prospects in the billion-dollar pain market. As it's done in the world of CF treatment, it could score a lasting win.
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Adria Cimino has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
