It was a solid first quarter for Vertex Pharmaceuticals (VRTX +2.49%), with Kalydeco sales increasing 31% year over year to $130 million.
Source: Vertex Pharmaceuticals.
The biotech is still looking for Kalydeco sales between $560 million and $580 million for the year, so it's going to have to pick up sales a little from here to reach that goal. In March, the company expanded the U.S. indication for the cystic fibrosis drug to include children ages 2 to 5 that have one of the 10 cystic-fibrosis-causing mutations the drug was already approved for in older patients, so there's some room to continue expanding into that population.
Unsurprisingly, Vertex is still losing money, albeit less than the year-ago quarter. The adjusted loss for the quarter came in at $0.62 per share, about 5% less than $0.65-per-share loss in the year-ago quarter.
Vertex burned through around $200 million during the first quarter, leaving it with $1.2 billion in the bank. For most companies, six quarters' worth of cash would be a huge red flag, but Vertex Pharmaceuticals is spending money because it's preparing for the launch of Orkambi.
Orkambi?
Orkambi is the new name of its combination of Kalydeco and lumacaftor, unveiled during the first-quarter earnings release.
The drug combination is under review by the Food and Drug Administration and by EU regulators for treating cystic fibrosis patients with the F508del mutation. Kalydeco is approved for 10 other mutations but can't treat patients with the F508del mutation on its own.
The new approval should boost Vertex's sales substantially, since F508del is the most common mutation that causes cystic fibrosis. Kalydeco is currently approved to treat about 3,700 patients, but Orkambi will be able to treat 20,500 cystic fibrosis patients in the EU and U.S. older than 12 with the F508del mutation. And there are another 5,500 kids aged 6 to 11 with the same mutation that could potentially use the drug if Vertex shows that the drug works in the younger population.
The FDA scheduled an advisory committee meeting for May 12 and has a goal of making a decision on Vertex's application by July 5. While Orkambi doesn't work nearly as well on patients with the F508del mutation as Kalydeco does on the mutations it treats on its own, the patients with the F508del mutation are harder to treat and don't have any other options, so an approval still seems likely.
Assuming Orkambi is approved, the burn rate should go down, so the company has more than six quarters to become cash flow-positive. And there's $300 million outstanding on its credit agreement that it can use if needed.
An approval in the EU, which is expected toward the end of the year, will probably be the key to push Vertex back into profitability.
And so Vertex sits, waiting to exhale and launch Orkambi as soon as regulators give the biotech the green light.
