On October 23, regulators at the Food and Drug Administration (FDA) cleared a key obstacle for Verve Therapeutics (VERV -4.44%), giving it the green light to proceed with an early-stage clinical trial in the U.S. to investigate one of its gene-editing therapy candidates currently known as VERVE-101. The pre-revenue biotech now has the opportunity to prove to the world that its platform is capable of curing rare inherited illnesses by correcting patients' genes.
But doing initial clinical trials in the U.S. is still a long way from commercializing a product and becoming a self-sustaining business, and many other challenges remain. Could the FDA's decision make this stock worth buying today for certain investors, or is it too early to bite?
The early innings are looking favorable
To start, let's contextualize what the business is trying to do and why the FDA's decision matters. VERVE-101 is Verve's most advanced pipeline program, and it's intended to treat or cure heterozygous familial hypercholesterolemia (HeFH), a hereditary heart disease that affects roughly three million people in the U.S. and the E.U. HeFH causes patients to accumulate unhealthy levels of LDL cholesterol (LDL-C), which leads to clogged arteries, heart attacks, and strokes.
VERVE-101 aims to reduce LDL-C by editing the patient's genome so as to mostly prevent the production of a protein called PCSK9, which inhibits the liver's ability to degrade excess cholesterol. Once PCSK9 is produced at a fraction of the level it was before treatment, the idea is that the patient's liver will take care of the LDL-C, bringing its concentrations down to a healthier range.
In the long run, if VERVE-101 looks like it's effective at treating HeFH, management is already signaling that it will want to test the therapy for treating atherosclerotic cardiovascular disease (ASCVD), which affects 54 million people in Europe and the U.S. Per Allied Market Research, the market for drugs that treat ASCVD was worth nearly $21 billion in 2022. So if everything goes as planned, Verve could one day offer a superior solution and capture a big portion of the market, which would make shareholders a lot richer.
The preliminary data about VERVE-101's efficacy from animal models look pretty good, but clinical trial data from human patients will be a far bigger validation of Verve's approach, and now the FDA is willing to let it collect that data. Importantly, there are already a pair of investigations ongoing in the U.K. and New Zealand. That means it could have some early information to report quite soon.
In fact, on Nov. 12, it'll be presenting at the 2023 convening of the American Heart Association's (AHA's) Scientific Sessions. It probably wouldn't bother to present its preliminary data unless it had good news.
Can it actually make it to the market?
Aside from the likely catalyst event in a few weeks and the potential to one day conquer a huge therapy market, there are a couple of other considerations investors should know.
Verve has $462 million in cash, equivalents, and short-term investments, and its trailing-12-month (TTM) operating expenditures are $214 million. Management says that its capital will be sufficient to fund operations into 2026 at a minimum, which looks like a reasonable estimate. But in early 2026, it will likely need to find more money by taking out new debt, issuing more stock, or getting help from one of its development partners.
On that note, the biotech has a trio of noteworthy collaborators, though it lacks a truly committed, powerful ally. It's collaborating with Beam Therapeutics, another pre-revenue gene-editing business, on four programs, including its only clinical-stage program. It's also partnered with Vertex Pharmaceuticals and Eli Lilly on a pair of early pre-clinical programs. It could realize as much as $465 million in milestone payments from its deal with Eli Lilly.
If either of those two big pharmas opt to expand their relationships with Verve, it'll be a bullish sign. But for that to happen, they'll probably first want to see progress in clinical trials, or at least progress in getting regulators to agree to grant permission to perform additional clinical trials for a few of the current preclinical projects.
There is a considerable risk of Verve failing to accomplish its greatest ambitions. As always, the standard biotech boilerplate about the risk of its clinical trials failing is relevant. Furthermore, regulators have already shown a considerable degree of scrutiny about the company's approach, and they are unlikely to let up anytime soon. The company could also run out of money eventually, especially if it fails to consolidate its collaborations into more long-lasting patronage relationships.
Nonetheless, from the perspective of today, Verve looks like it has what it takes to demonstrate the usefulness of its therapies and its gene-editing platform, and there aren't (yet) any major red flags to note. For those who are daring enough to dabble in biotech stocks, it's a better-than-average bet when it comes to investing in early-stage companies.
