Analyst Conference Summary


Vertex Pharmaceuticals

conference date: April 29, 2020 @ 2:00 PM Pacific Time
for quarter ending: March 31, 2020 (first quarter, Q1, 2020)

Forward-looking statements

Overview: Rapid revenue growth on Trikafta ramp, increased 2020 guidance.

Basic data (GAAP):

Revenue was $1.52 billion, up 8% sequentially from $1.41 billion, and up 77% from $858 million in the year-earlier quarter.

Net income was $603 million, up 3% sequentially from $583 million and up 124% from $269 million year-earlier.

Diluted Earnings Per Share (EPS) were $2.28, up 3% sequentially from $2.23 and up 122% from $1.03 year-earlier.


Increase full 2020 revenue guidance to $5.3 to $5.6 billion, up from prior $5.1 to $5.3 billion.

Conference Highlights:

Reshma Kewalramani, CEO, said "Our business continues to grow, and throughout the first quarter, thousands of patients initiated treatment with our medicines worldwide. The U.S. launch of Trikafta has been remarkable, with the majority of eligible patients having now initiated treatment with this medicine. This strong interest reflects Trikafta's substantial benefits for patients and has resulted in significant increases in revenue to support continued investment in both our internal pipeline and business development efforts to support future growth. Looking ahead, we continue to be differentiated by our focus on serial innovation, investment in transformative medicines aimed at the underlying cause of disease, the breadth of our pipeline and capabilities and our financial strength."

Trikafta was approved by the FDA on October 21, 2019. It combines elexacaftor/tezacaftor/ivacaftor and ivacaftor for the treatment of cystic fibrosis in people ages 12 years and older who have at least one F508del mutation. An estimated 18,000 potential patients in the U.S. A phase 3 trial to expand the label to children aged 6 to 11 is ongoing. In April 2020 The majority of the approximately 18,000 eligible U.S. patients have now initiated treatment with Trikafka. Under marketing review in the EU. Believes Trikafta can treat about 90% of CF patients.

The COVID-19 pandemic has not had an impact on Vertex's supply or distribution systems.

Non-GAAP results: Net income $674 million, up 52% sequentially from $444 million, and up 128% from $296 million year-earlier. EPS $2.56, up 51% sequentially from $1.70, and up 125% from from $1.14 year-earlier.

In April 2020, Vertex entered into a collaboration with Affinia Therapeutics to gain access to a novel library of AAV capsids that will bolster ongoing research and development work in genetic therapies. The goal is to develop genetic therapies for people affected by Duchenne muscular dystrophy (DMD), myotonic dystrophy 1 (DM1) and CF.

Vertex plans to advance its cell therapy program for the treatment of type 1 diabetes into clinical development in late 2020 or early 2021.

$ millions
Q1 2020 Q4 2019 Q1 2019 y/y % change
product subtotal

Vertex continued a Phase 2 dose-ranging study evaluating the once-daily potentiator VX-561 as a monotherapy as requested by the FDA. The study is designed to evaluate multiple doses of VX-561 to support potential Phase 3 development of VX-561 in a once-daily triple combination regimen. Vertex also initiated a Phase 2 study evaluating the next-generation corrector, VX-121, in combination with VX-561 and tezacaftor as a potential once-daily triple combination regimen

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

Vertex continued a Phase 1 study of VX-147, the company's first investigational oral small molecule medicine for the treatment of APOL1-mediated focal segmental glomerulosclerosis (FSGS) and other serious kidney diseases. VX-147 is designed to inhibit APOL1 function, which is a causal genetic factor in FSGS and other proteinuric kidney diseases. Vertex is also advancing multiple other APOL1 inhibitors through preclinical development.

As of April 2020, Vertex has temporarily paused screening and enrollment in the Phase 2 study of VX-814; however, the study remains active and Vertex continues to initiate new clinical trial sites to enable future patient enrollment. VX-814 is for alpha-1 antitrypsin (AAT) deficiency, a genetic disorder that is caused by mutations in a single gene that result in life-shortening systemic complications, primarily in the lung and liver. Also has a Phase 1 trial underway for a second AAT therapy, VX-864.

In Q2 2019 Vertex initiated a Phase 2 proof-of-concept study of VX-147 in people with FSGS

See also the Vertex Pharmaceuticals Pipeline page.

Cash and equivalents balance ended at $4.2 billion, up sequentially from $3.81 billion. No debt.

Cost of revenue was $162 million. Research and development expense was $449 million. Sales, general and administrative expenses were $182 million. Change in contingent consideration $2 million. Total costs and expenses were $795 million, leaving operating income of $720 million. Interest expense net $2 million. Other expense $61 million. Income tax $55 million.


AAT program data timing? The Phase 2 study of AATD has about 50 people with 28 days of treatment and 50 days of follow up. We paused enrollment, but are now restarting. Results timeline depends on enrollment. When we know we will provide an update.

EU potential approval, uptake path? We filed in October 2019. Germany provided immediate access while price is negotiated. Some, like Ireland, Denmark, have portfolio agreements. Remainder begin with approval, then starts reimbursement agreement process.

VX-864? Did complete Phase 1. Will go into Phase 2 in second half of 2020.

VX-147? APO1-mediated FSGS kidney disease. Proteinuria is the endpoint in the Phase 2 study.

Q1 run rate above guidance? There was some advance ordering into Q1. Normally after the introduction of this type of drug compliance starts to drop off until it hits a plateua.

Our business development strategy remains unchanged.

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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. These are my personal notes, not advice.

Copyright 2020 William P. Meyers