Vertex Stock Tumbles After Strong Earnings. What’s Spooking Investors.

Pharmaceutical company Vertex said it wouldn’t progress its pain medication VX-993 to advanced testing. ((Igor Akimov/Dreamstime.com))

Vertex Pharmaceuticals stock was among the worst performer in the S&P 500 index early Tuesday after the drugmaker said it wouldn’t advance its next-generation pain medicine to late stage trials.

The news overshadowed the company’s expectations-beating quarterly results and shares tumbled 15% to $399.99 in morning trading.

Its pain drug VX-993 failed to meet its primary endpoint in a recent Phase 2 study, Vertex said in a statement late Monday. VX-993 had been seen as a follow-up to Journavax, a non-opioid pain treatment approved by the Food and Drug Administration earlier this year.

Based on the results, the medicine wasn’t expected to be superior to its existing treatments, and therefore wouldn’t be advanced for treatment of acute pain, said Chief Medical Officer Carmen Bozic in a statement late Monday.

The failure of VX-993 along with the decision to cancel plans for a late-stage trial of Journavax for lumbosacral radiculopathy—a condition that can cause pain due to compressed nerves—could limit long-term sales potential, noted Leerink Partners analyst David Risinger.

Risinger maintained a Market Perform rating on shares, but lowered his price target to $458 from $503.

Second-quarter adjusted earnings came in at $4.52 a share on revenue of $2.96 billion, beating expectations of adjusted earnings of $4.27 a share on revenue of $2.9 billion.

Write to Elsa Ohlen at elsa.ohlen@barrons.com