Analyst Conference Summary


Vertex Pharmaceuticals

conference date: January 26, 2022 @ 1:30 PM Pacific Time
for quarter ending: December 31, 2021 (fourth quarter, Q4, 2021)

Forward-looking statements

Overview: Continues strong revenue ramp.

Basic data (GAAP):

Revenue was $2.07 billion, up 5% sequentially from $1.98 billion, and up 27% from $1.63 billion in the year-earlier quarter.

Net income was $770 million, down 10% sequentially from $852 million and up 27% from $604 million year-earlier.

Diluted Earnings Per Share (EPS) were $3.00, down 9% sequentially from $3.28 and up 30% from $2.30 year-earlier.


For the full year 2022 expects product revenues between $8.4 and $8.6 billion. GAAP expenses $3.3 to $3.45 billion. Non-GAAP expenses $.270 to $2.75 business. Non-GAAP tax rate 21% to 22%.

Conference Highlights:

Reshma Kewalramani, CEO, said "As we move into 2022, with multiple programs in mid and late-stage development, there are important milestones ahead. With continued innovation in CF and progress across our pipeline, we are poised to serve many more patients and drive revenue and earnings growth in 2022 and many years into the future." Cystic fibrosis can continue to grow as there are still many untreated patients, including in countries that have not yet, or only recently, approved reimbursement.

In January 2022 the EU approved a label extension from Kaftrio (Trikafta) to treat CF in patients ages 6 to 11. In Q4 2021 received Kaftrio reimbursement approvals in Spain and Netherlands.

Orkambi, in Phase 3 results in patients aged 12 to 24 months, met its endpoint, so applications to regulators will be made in Q2 2022.

Non-GAAP results: Net income $866 million, down 7% sequentially from $926 million, and up 31% from $661 million year-earlier. EPS $3.37, down 5% sequentially from $3.56, and up 34% from from $2.51 year-earlier.

$ millions
Q4 2021 Q3 2021 Q4 2020 y/y % change

VX-147 for APOL1-mediated FSGS Phase 2 reported positive results in Q4 2021. Believes this is a multi-billion dollar opportunity. Will advance to Phase 3 in 2022.

Vertex plans to advance one or more novel small molecule zAAT correctors for Alpha-1 Antitrypsin Deficiency into the clinic in 2022.

Vertex is conducting two Phase 2 dose ranging acute pain studies with VX-548, one following bunionectomy surgery and the other following abdominoplasty surgery. Vertex expects to obtain data from both studies in Q1 2022.

VX-880 for type 1 diabetes 150 day data was very positive; could be transformative.

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. In both studies for CTX001 target enrollment was achieved in Q3 2021. Plans regulatory filings for late 2022. Already preparing for launch. Believes about 150,000 patients in U.S. or Europe.

See also the Vertex Pharmaceuticals Pipeline page.

Cash and equivalents balance ended at $7.5 billion, up sequentially from $6.96 billion. No debt.

Cost of revenue was $247 million. Research and development expense was $694 million. Sales, general and administrative expenses were $255 million. Change in contingent consideration $2 million. Total costs and expenses were $1.19 billion, leaving operating income of $878 million. Interest expense net $14 million. Other income $7 million. Income taxes $101 million.

Q&A selective summary:

FDA plans for VX-147? Important point is Phase 2 we studied FSGS, just one kind of APOL1 kidney disease. FSGS is a narrow group, about 1/10th of the total. In Phase 3 we will address the broader population. Unprecedented results in Phase 2. Phase 3 design considerations include measures of kidney damage, selection of endpoints, including timing, slope, and depth. Proteinuria could be an acceptable endpoint. Degree of proteinuria is a predictor of heart outcomes.

Sicle cell? Both studies were oversubscribed. 25,000 sickle cell patients could be eligible under the current regime. With gentler regimens we could address the larger population.

VX-880 safety, dosage? The half dose data is impressive. The important thing is endogenous insulin, H A1C, and decline in need to use insulin. We hope for a funtional cure, so we hope for consistent results, including improvement or elimination of exogenous insulin. Therapy was well tolerated. Also, patient did not suffer from low glucose levels either.

Capital is mainly being reinvested internally. Some business development. Strategy is working, so will remain the same.

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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 2022 William P. Meyers