Vertex Pharmaceuticals Waits to Hit the Triple

Vertex Pharmaceuticals (VRTX 0.60%) continues to post substantial revenue growth, although many investors are rightfully looking ahead to its next-generation triple combinations for cystic fibrosis.

Vertex Pharmaceuticals results: The raw numbers

Data source: Vertex Pharmaceuticals. EPS = earnings per share.

What happened with Vertex Pharmaceuticals this quarter?

• Combined sales of Vertex's cystic fibrosis drugs -- Kalydeco, Orkambi, and Symdeko -- were up 42% year over year. Overall revenue didn't grow quite as fast because royalty revenue was down year over year, as was collaboration revenue, although neither is a very large chunk of overall revenue.
• Sales of Kalydeco increased 15.5% year over year. Orkambi sales fell year over year, but that was to be expected as some patients switched to Symdeko, which was approved earlier this year. Nevertheless, sales of Orkambi plus Symdeko were 60% higher than Orkambi sales in the year-ago quarter, so the two drugs combined are headed in the right direction.
• Overseas reimbursement for Orkambi continues to improve, including recent agreements with Denmark and Australia that include provisions for quick reimbursement for certain future cystic fibrosis medicines, which would presumably include Symdeko and the triple combinations when they're approved.
• Clinical development of the triple combinations continues to progress. In September, Vertex completed enrollment for two phase 3 trials for VX-659 in triple combination with tezacaftor and ivacaftor, which should read out later this year. The phase 3 studies for VX-445 in triple combination with tezacaftor and ivacaftor are expected to be fully enrolled before the end of this year, putting a data readout in the first quarter of 2019.

Image source: Getty Images.

What management had to say

Jeff Leiden, Vertex's chairman and CEO, pointed out how far the company has come with getting its current drugs approved for cystic fibrosis (CF) patients with all the different types of mutations and how the triple combinations will get the company closer to complete coverage: "In CF approximately half of all patients are now eligible for a Vertex CF medicine. And we're progressing rapidly toward the development of a single medicine to treat any CF patient with one or more F508del mutations -- approximately 90% of all people with the disease."

Leiden also highlighted the company's move beyond cystic fibrosis, using the profits from those drugs to license additional pipeline candidates: "With our strong financial profile, we have increased ability to in-license or acquire assets or establish scientific collaborations that provide access to unique product opportunities and technology platforms. We've completed a number of such transactions in recent years and we've expanded our internal team devoted to finding and evaluating potential opportunities for scientific innovation, with the goal of further broadening our pipeline and scientific expertise in the future."

Looking forward

Management reiterated its guidance for cystic fibrosis product sales of $2.9 billion to $3 billion. The company hasn't given earnings guidance, but since more sales don't add much in the way of additional costs, earnings should continue to grow faster than revenue.

Near-term growth will come from the potential triple combinations. With two shots on goal and solid earlier-stage data, it seems likely one will end up scoring. Vertex plans to make a decision about which one to take forward after the VX-445 trials read out and submit a marketing application to the Food and Drug Administration by mid-2019.

Longer term, investors should keep an eye on Vertex's pipeline. CTX001 is arguably the most innovative, albeit more risky, seeking to use CRISPR Therapeutics' (NASDAQ: CRSP) gene-editing technology to treat a blood disease called beta thalassemia. The companies recently started the first clinical study for CTX001, so it'll be a number of years before the therapy is on the market.