Analyst Conference Summary

Biotechnology

conference date: October 24, 2018 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2018 (third quarter, Q3, 2018)

Forward-looking statements

Overview: Phenominal revenue growth of 42%, even though it is now on a high base.

Basic data (GAAP):

Revenue was $783 million, up 4% sequentially from $752 million, and up 42% from $550 million in the year-earlier quarter.

Net income was $129 million, down 37% sequentially from $206 million, way up from negative $103 million year-earlier.

Diluted Earnings Per Share (EPS) were $0.50, down 37% sequentially from $0.80, but up from negative $0.41 year-earlier.

Guidance:

Conference Highlights:

Jeff Leiden, CEO, said "In our development pipeline, we are advancing potential medicines for pain, sickle cell disease and beta thalassemia and are also beginning to advance additional compounds from research into early clinical development that could fundamentally change the treatment of other serious diseases in the future. Our ability to treat more and more people with CF is driving revenue and earnings growth and significant cash flow generation, which enables the company to invest to discover and develop transformative future medicines for the treatment of CF and other life-threatening diseases."

About 34,000 patients are eligible for the currently available Vertex medicines. The triple combination regimen will raise tht to about 68,000. Gene editing could raise that to 75,000.

Non-GAAP results: Net income $282 million, up 16% sequentially from $244 million, and up 107% from $136 million year-earlier. EPS $1.09, up 16% sequentially from $0.94, and up 106% from from $0.53 year-earlier.

Results from Phase 3 Orkambi trial in children aged 2 to 5 were positive; on July 27 approval was announced.

Great data from both triple VX-659 & VX-445 triple combination (with tezacaftor/ivacaftor) regimen. Phase 3 trials are now underway. Could cover 90% of the CF population. Enrollment should complete before the end of 2018.

CTX001 for B-Thalassemia will start a Phase 1/2 trial in 2018.

VX-150 Phase 2 data reported "significant relief of acute pain." A Phase 2 study in neuropathic pain should have data in early 2019.

See also the Vertex Pharmaceuticals Pipeline page.

Cash and equivalents balance ended at $ billion, up sequentially from $2.77 billion. No debt.

Cost of revenue was $ million. Research and development expense was $ million. Sales, general and administrative expenses were $ million. Restructuring $ million. Total costs and expenses were $ million, leaving operating income of $ million. Interest and other income $ million. Income tax $ million. Loss attributable to noncontrolling interest $ million.

Q&A:

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