Quarterly updates just look too easy for Vertex Pharmaceuticals (VRTX 1.23%). The biotech announced its first-quarter earnings results on Tuesday. Yet again, Vertex posted strong revenue and earnings growth that blew past Wall Street analysts' estimates.

Vertex's management team fielded questions from analysts during the company's Q1 conference call Tuesday evening. Here are five things you need to know from Vertex's Q1 update.

Two jigsaw puzzle pieces connected with "cystic fibrosis" and "genetics" printed on them

Image source: Getty Images.

1. Sales for Kalydeco and Orkamabi are falling -- but it's OK

Vertex currently has three approved drugs, all of which treat the underlying causes of cystic fibrosis (CF). In the first quarter, sales for two of those drugs declined from the prior-year period. Kalydeco's sales fell 2.4% year over year, to $244 million, while sales for Orkambi sank 17.2%.

Should investors be worried? Not really. Vertex CFO Stuart Arbuckle said in the conference call that the company's Q1 revenue was negatively impacted by channel inventory build in late 2018 and by higher gross-to-net adjustments. The first issue is only a temporary one. Arbuckle noted that the extra inventory was "more than burnt off during the course of the first quarter."

Vertex controller Paul Silva stated that there were two drivers behind the higher gross-to-net adjustments. More purchases were made by 340B entities, which receive similar drug price discounts as Medicaid does. Also, Vertex spent more on its cost-sharing program that helps patients cover copays.

Going forward, though, sales for both Kalydeco and Orkambi should pick up momentum thanks to regulatory approvals for treating younger patients. 

2. A fantastic launch for Symdeko/Symkevi

There's an even bigger reason why you don't need to worry about falling sales for Kalydeco and Orkambi, though: Sales growth for Symdeko/Symkevi more than made up for the two drugs' sales declines. Vertex reported that Q1 sales for Symdeko/Symkevi soared 841% year over year, to $320 million. 

Vertex expects continued strong growth for Symkevi in Germany. The company also recently won regulatory approval for the drug in Australia. While the sizzling growth rate in the U.S. will taper off, Symdeko should still enjoy solid growth if it gains Food and Drug Administration (FDA) approval later this year for treating younger patients.

3. Triple-drug CF combo on the way

Symdeko/Symkevi is the shining star for Vertex now, but that's likely to change in the near future. The biotech has a couple of triple-drug combo therapies for treating CF to choose between. Vertex expects to review final 24-week data from phase 3 studies of these combos in the second quarter. The company will pick the stronger of the two triple-drug combos to submit for regulatory approval.

Vertex is still on track to file for FDA approval in the third quarter of this year. It will follow up with a European submission later in 2019. Although the company will have to negotiate with individual European countries to obtain reimbursement for its triple-drug combo (assuming it wins approval), Arbuckle is confident about Vertex's prospects for success. 

4. Exciting pipeline prospects

Although Vertex's primary focus is on CF, much of the discussion in the company's Q1 conference call centered on its pipeline candidates that target other diseases. Vertex is especially excited about the prospects for its alpha-1 antitrypsin (AAT) deficiency program.

Vertex is evaluating its first AAT molecule in a phase 1 clinical trial. CEO Jeff Leiden said that the biotech expects to advance its second AAT corrector to clinical testing this year and has others in late preclinical testing. He added that Vertex is able to effectively leverage its expertise because AAT "looks and smells" like CF.

The company also likes the potential for its experimental pain drug VX-150 and other pain programs in preclinical testing. In addition, Vertex is working with CRISPR Therapeutics on testing gene-editing therapy CTX001 in treating rare blood diseases beta-thalassemia and sickle cell disease. Leiden said that the two companies "remain on track to dose the first patient with sickle cell disease with CTX001 in the middle of the year."

5. The numbers are compelling

Perhaps the most critical thing for investors to know from Vertex's Q1 update is just how significant its growth could be. Leiden noted that the company is making around $3 billion annually with its three drugs that currently can treat around 18,000 patients worldwide. That translates to more than $166,000 per patient each year.

But with Vertex's triple-drug combo likely to win regulatory approval in the near future, the addressable patient population will jump to 65,000 to 68,000. Leiden said that Vertex doesn't anticipate a significant price decrease for its triple-drug combo compared to its existing drugs, considering the great benefit and value the new drug will provide. 

If we assumed that Vertex would be able to generate $150,000 per patient when its triple-drug combos are on the market, that would mean the company's annual revenue could soar to close to $10 billion. Any pipeline wins for its non-CF drugs would only sweeten the pot for Vertex.

The bottom line is that the numbers for Vertex are definitely compelling. Even with sales for Kalydeco and Orkambi falling in the first quarter, I continue to view Vertex as the best biotech stock on the market.