Analyst Conference Summary


Vertex Pharmaceuticals

conference date: July 29, 2021 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2021 (second quarter, Q2, 2021)

Forward-looking statements

Overview: Revenue growth strong.

Basic data (GAAP):

Revenue was $1.79 billion, up 4% sequentially from $1.72 billion, and up 18% from $1.52 billion in the year-earlier quarter.

Net income was $67 million, down 90% sequentially from $653 million and down 92% from $837 million year-earlier.

Diluted Earnings Per Share (EPS) were $0.26, down 90% sequentially from $2.49 and down 92% from $3.18 year-earlier.


Raised full year 2021 product revenue guidance to $7.2 to $7.4 billion.

Conference Highlights:

Reshma Kewalramani, CEO, said "In the second quarter of 2021, we saw continued, significant growth and strong business performance in our cystic fibrosis franchise. We have now secured reimbursement agreements for the triple combination in more than 15 countries outside the U.S. and started expansion into younger age groups with the U.S. approval in patients 6 to 11 years of age last month. With these advancements, we are poised to reach more patients in 2021 than previously forecasted and are therefore raising our 2021 revenue guidance. Looking forward, we continue to see significant growth ahead in CF, with more than 30,000 CF patients who may benefit from the triple combination but who are not yet treated."

GAAP profit drop q/q and y/y was primarilly from about $0.9 billion upfront payment to Crispr.

Trikafta (Kaftrio in EU) Phase 3 trial to expand the label to children aged 6 to 11 reported positive data and a PFUFA of June 8, 2021 was set. Believes Trikafta can treat about 90% of CF patients. Label expanded by FDA to include people 12 and older. Approved for marketing and reimbursement in Switzerland in Q4 2020.

On April 28, 2021 Kaftrio (ivacaftor/texacaftor/elexacaftor) was approved for cystic fibrosis patients 12 years or older with at least one F508del mutated CFTR gene.

In April, 2021, Vertex entered into a research collaboration with Obsidian Therapeutics to discover novel therapies that regulate gene-editing for the treatment of serious diseases. This collaboration enables us to leverage Obsidian’s cytoDRiVE platform technology to discover gene-editing medicines whose therapeutic activity can be precisely controlled using small molecules.

Non-GAAP results: Net income $811 million, up 4% sequentially from $781 million, and up 18% from $687 million year-earlier. EPS $3.11, up 24% sequentially from $2.51, and up 19% from from $2.61 year-earlier.

$ millions
Q1 2021 Q4 2020 Q1 2020 y/y % change

Vertex and its partner CRISPR Therapeutics are evaluating the use of a CRISPR gene-edited therapy for the treatment of transfusion-dependent beta thalassemia and sickle cell disease. Enrollment is ongoing in the clinical studies for CTX001, with more than 20 patients have been dosed with CTX001 to date. Completion of enrollment in both studies is expected in 2021.

VX-880 for type 1 diabetes (T1D) was cleared for clinical trail by the FDA. The Phase 1/2 trial should begin first half of 2021.

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

A Phase 2 trial underway for a second AAT therapy, VX-864. Data expected in first half of 2021.

See also the Vertex Pharmaceuticals Pipeline page.

Cash and equivalents balance ended at $6.71 billion, down sequentially from $6.9 billion. No debt.

Cost of revenue was $228 million. Research and development expense was $1.41 billion. Sales, general and administrative expenses were $195 million. Change in contingent consideration $2 million. Total costs and expenses were $1.83 billion, leaving operating loss of $38 million. Interest expense net $14 million. Other income $8 million. Income tax benefit $111 million.

Q&A selective summary:

MSGS readout scenarios? VX147 is on track in Phase 2, readout in 2H. Looking for double digit reduction in protinuria. Accelerated or full approval will need to be discussed with regultors.

CF Phase 3 trial, non-inferiority? Had FDA end of Phase 2 meeting. Design reflects that. 121 looks more efficacious than Tricafta. The endpoint is non-inferiority, but the drug has the potential to be better than Tricafta.

CTX001 timeline? Target enrollment completion in Q3. The other negotiations include manufacturing, filing possible in 18 to 24 months.

We see significant growth in our CF franchise for years to come. We are only treating about half the patients today who are likely to benefit from our therapies. Part of that is the need to launch or get reimbursement in various national markets.

We are interested in pain therapies, including beyond the clinical trials underway.

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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 2021 William P. Meyers