Vertex Pharmaceuticals (NASDAQ:VRTX) released fourth-quarter earnings on Wednesday, but there weren't any major surprises, since the company had already released preliminary fourth-quarter sales and 2015 guidance at the J.P. Morgan Healthcare Conference earlier this month.
Fourth-quarter sales of Vertex's cystic fibrosis drug Kalydeco were $124 million, up slightly from the "approximately $120 million" the company mentioned at J.P. Morgan. The biotech is looking for 2015 Kalydeco sales of $560 million to $580 million, unchanged from the conference. That would be a 21% increase if it hits the bottom of the guidance.
Vertex's actual revenue will be higher, but the company isn't giving any guidance on that. There should be some royalty revenue and probably some revenue associated with collaborations -- the two combined for $93 million in 2014 -- but the biggest unknown line will come from sales of its combination of Kalydeco and lumacaftor.
The FDA is scheduled to give a decision to approve the combination by July 5, but since Kalydeco was approved three months before the FDA's goal, we could get a decision well before that. There aren't any drugs to approve the underlying condition for cystic fibrosis patients with the F508del mutation that the combination treats. And there are a lot of patients who could benefit from the drug.
While Kalydeco is approved to treat about 3,100 patients, which should go up to around 3,700 by the end of this year with pediatric approvals in the U.S. and EU and the inclusion of an additional mutation in the EU, there are 20,500 cystic fibrosis patients in the EU and U.S. older than 12 who could be treated with the combination of Kalydeco and lumacaftor. There are another 5,500 kids aged 6 to 11 with the same mutation, but Vertex will have to show that the drug works on younger patients before insurers will widely reimburse it. A pediatric study is expected to begin in the first half of this year.
Any sales Vertex gets from the combination product this year will probably come from the United States. It's submitted an application to EU regulators, but a decision isn't expected until the fourth quarter, and then setting up reimbursement will push a rollout in the EU into 2016.
The timing of the U.S. launch and the trajectory of the launch is important, because Vertex plans to spend $770 million to $800 million on R&D this year and another $280 million to $300 million on SG&A expenses. The biotech ended the year with $1.4 billion in the bank, so Vertex can cover those expenses, but it sure would be nice to get back to profitability.
In addition to the lack of sales guidance for the Kalydeco and lumacaftor combination, investors got snubbed on data from a phase 2 trial testing Kalydeco with another drug called VX-661. The data is supposed to be available this quarter, but it appears it'll be closer to the latter part of the quarter. VX-661 is in the same class as lumacaftor, but the hope is that it'll be more efficacious, potentially allowing VX-661 and Kalydeco to work on more patients than the lumacaftor and Kalydeco combination.
While today's announcements offered little surprises, we may still get some this quarter.