Analyst Conference Summary


Vertex Pharmaceuticals

conference date: July 30, 2020 @ 2:30 PM Pacific Time
for quarter ending: June 30, 2020 (second quarter, Q2, 2020)

Forward-looking statements

Overview: Very strong sales of the new drug, Trikafta.

Basic data (GAAP):

Revenue was $1.52 billion, flat sequentially from $1.52 billion, and up 62% from $940 million in the year-earlier quarter.

Net income was $837 million, up 39% sequentially from $603 million and up 213% from $327 million year-earlier.

Diluted Earnings Per Share (EPS) were $3.18, up 39% sequentially from $2.28 and up 209% from $1.03 year-earlier.


Increased revenue guidance to $5.7 to $5.9 billion. Otherwise unchanged. Kaftrio revenue on launch in EU is uncertain; some included in guidance.

Slide 11 of presentation projects, with a vague arrow, growth through 2024.

Conference Highlights:

Reshma Kewalramani, CEO, said "We have seen remarkable uptake of Trikafta in the U.S., with the majority of eligible patients now taking this medicine. And in Europe, we secured a positive CHMP opinion earlier than expected and entered into a landmark expansion of our reimbursement agreement with NHS England that will give patients in England access to this medicine rapidly following European Commission approval."

Trikafta (Kaftrio in EU) was approved by the FDA on October 21, 2019. A phase 3 trial to expand the label to children aged 6 to 11 is ongoing, data expected before end of 2020. In July 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 $687 million, up 2% sequentially from $674 million, and up 110% from $327 million year-earlier. EPS $2.61, up 2% sequentially from $2.56, and up 107% from from $1.26 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
Q2 2020 Q1 2020 Q2 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.

Vertex and its partner CRISPR Therapeutics provided new clinical data at the European Hematology Association Congress from the two ongoing Phase 1/2 studies of the investigational CRISPR/Cas9 gene-editing therapy CTX001 in patients with transfusion-dependent beta thalassemia and in patients with severe sickle cell disease. Data from two TDT patients demonstrated clinical proof-of-concept for CTX001 in this disease, and longer duration data from one SCD patient showed a durable effect on HbF levels and the patient was free of vaso-occlusive crises. Conditioning and dosing have been resumed following temporary COVID-19-related pauses in both studies. Data from additional patients expected in the second half of 2020.

See also the Vertex Pharmaceuticals Pipeline page.

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

Cost of revenue was $185 million. Research and development expense was $421 million. Sales, general and administrative expenses were $192 million. Change in contingent consideration $9 million. Total costs and expenses were $806 million, leaving operating income of $718 million. Interest expense net $10 million. Other income $116 million. Income tax benefit $13 million.


2 VX864/814 trials differences? They are very similar.

New nations in 2H? We are assuming incremental revenue from an EU approval, but we do not have an approval yet, or its timing. Also the launch will be virtual.

DMD/DM1 programs? We acquired that, we are in late preclinical development, have had discussins with the FDA. Working hard on process and analytic development to get the right dosing.

Patient numbers, reimbursement? FMF patients, 10,000 patients eligible in Europe, about half are existing patients.

AATD, VX814 or 814? It is looking at the functional serum levels, safety, PK/PD relationship.

FDGS, proteinuria? Much thought has been given to proteinuria. Our Phase 2 study is of 12 week duration because we think it will take that long to see a reduction.

Positioning for thalessemia and sickle cell CTX001? We are seeing very good hemoglobin improvements. Both patients went to no need for transfusions, one patient now for over 1 year. Big difference between treating and transforming the disease. Plus ours is a one-time therapy.

Switching v. new patients in Trikafta? Vast majority in both naive and switching. We are now at the flat part of the launch curve now.

For the last 10% of patients, they make no protein, so a nucleic acid program will be needed, like our mRNA program with Moderna. There is also a delivery question.

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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