Could 1 Tiny Biotech Topple Vertex Pharmaceuticals' Cystic Fibrosis Empire?
This risk is weighing on the stock.
Overview
Vertex Pharmaceuticals (NASDAQ: VRTX) has dominated the market for cystic fibrosis (CF) medicines since it earned approval for its first drug in this niche in 2012. To this day, most of the company's revenue comes from its CF franchise. In the second quarter, Vertex posted $3.33 billion in revenue, representing a 12% year-over-year increase. CF-related sales were $3.2 billion. If Vertex faces stiff competition in this field, the company will lose some of its pricing power, resulting in significantly lower revenue and earnings. And many analysts fear that may happen soon, given the progress Sionna Therapeutics (NASDAQ: SION), a clinical-stage biotech, is making. Should investors be worried about Vertex Pharmaceuticals' prospects?
Image source: The Motley Fool.
Vertex Pharmaceuticals is worth almost $123 billion, compared to Sionna's $2.2 billion. But the smaller biotech has made it its mission to disrupt the CF drug market. Sionna focuses entirely on this area. To understand why many people are taking Sionna seriously, let's first review what causes CF. A misfolded CFTR protein -- which normally helps keep mucus in the lungs thin -- is behind this rare disease. It leads to thick, sticky mucus that clogs the airways, disrupts breathing, and traps germs and bacteria, contributing to recurrent infections.
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Originally published at www.fool.com.