Analyst Conference Summary


Vertex Pharmaceuticals

conference date: October 28, 2015 @ 2:00 PM Pacific Time
for quarter ending: September 30, 2015 (third quarter, Q3, 2015)

Forward-looking statements

Overview: Strong revenue growth from introduction of Orkambi, but still in the red. Increased guidance. Expects to be profitable in Q4.

Basic data (GAAP):

Revenue was $309.8 million, up 87% sequentially from $166.1 million, and up 73% from $179.0 million in the year-earlier quarter.

Net income was negative $95.1 million, up sequentially from negative $188.8 million, and up from negative $170.1 million year-earlier.

Earnings Per Share (EPS) were negative $0.39, up sequentially from negative $0.78, and up from negative $0.72 year-earlier.


Increased revenue guidance for full year 2015 to: Kalydeco revenue between $605 and $620 million. No estimate given for Orkambi revenue.

Conference Highlights:

Orkambi was approved by the FDA on July 2, 2015 for cystic fibrosis (CF) patients with two copies of the F508del mutation. Sales were $130.8 million in the quarter. More than 3,000 patients started Orkambi in the U.S. in the third quarter. 8,500 people in the U.S. have two copies of the F508del mutation. Working with payers on reimbursement, which is going well so far. EU approval is expected soon.

Kalydeco (ivacaftor) for cystic fibrosis had sales of $165.9 million, up 7% sequentially from $ 154.9 million and up 31% y/y from $126.8 million.

Incivek for hepatitis C revenue shrank to $5.8 million as it has been essentially driven out of the market by newer therapies.

Non-GAAP results: Net income negative $31.9 million, up sequentially from negative $130.7 million, and up from negative $86.2 million year-earlier. EPS negative $0.13, up sequentially from negative $0.54, and up from from negative $0.37 year-earlier.

$ millions
Q2 2015
Q3 2014
y/y % change
product subtotal

Vertex plans to bring two next-generation correctors for cystic fibrosis, VX-152 and VX-440, into clinical development. The first Phase 1 study is to begin this week.

On October 7 a supplemental NDA for Kalydeco for patients aged 2 and up with one of 23 residual function mutations was submitted to the FDA. PDUFA date is February 6, 2016.

Vertex is exploring other therapies for CF and other indications including cancer and pain, including VX-970, a kinase inhibitor, for solid tumors. Two Phase 1 studies are ongoing.

This week Vertex formed an alliance with CRISPR Therapeutics to create therapies using gene editing.

See also the Vertex Pharmaceuticals Pipeline page.

Cash and equivalents balance ended at $1.0 billion, flat sequentially from $1.0 billion. Debt $300 million.

Cost of revenue was $30.3 million. Royalty expense was $1.7 million. Research and development expense was $246.3 million. Sales, general and administrative expenses were $99.8 million. Restructuring expense was $1.8 million. Total costs and expenses were $379.8 million, leaving operating loss of $92.5 million. Interest expense $21.1 million. Other expense was $1.3 million. Income tax $1.3 million.


How much inventory stocking for Orkambi took place in the quarter? $15 to $20 million.

Will prices be different in the U.S. and E.U. for Orkambi? Our approach to pricing in Europe will be based on the seriousness of the disease and our investments, including the ones we plan to make. But we must be sensative to the economic situation in Europe. 2016 revenues will only be from Germany, with minimal contributions from other countries.

Seasonality in Q4 for Orkambi? We do not expect that to be much of a factor.

Wait times for script approvals for Orkambi? It takes about a month right now from the time of prescription writing to time to initiation of treatment.

On next-gen correctors, do they change the half-life? When you add all three drugs together you do not see the effect on half-life.

Capital allocation? We anticipate turning profitable in the fourth quarter. After internal R&D, we will use cash for acquiring external R&D. As more cash become available we can address capital structure issues.

% of Medicaid patients for Orkambi? 20% was government channel, and believe it will eventually reach 35%, which would lead to a mid-teens gross to net adjustment.

Next gen, do you plan to progress both or pick one? If the data supports it, we would move both compounds into evaluation.

We believe the remaining U.S. Orkambi patients will start the therapy in Q4 or some time in 2016. There is no one reason they have not started yet.

There are about 2500 eligible patients for Orkambi in Germany.


OpenIcon Analyst Conference Summaries Main Page



More Analyst Conference Pages:



Disclaimer: My analyst call summaries may include both our condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2015 William P. Meyers