Analyst Conference Summary


Vertex Pharmaceuticals

conference date: May 5, 2022 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2022 (first quarter, Q1, 2022)

Forward-looking statements


Basic data (GAAP):

Revenue was $2.20 billion, up 5% sequentially from $2.10 billion, and up 22% from $1.79 billion in the year-earlier quarter.

Net income was $811 million, up 8% sequentially from $762 million and up 1110% from $67 million year-earlier.

Diluted Earnings Per Share (EPS) were $3.13, up 6% sequentially from $2.96 and up 1103% from $0.26 year-earlier.


Updated for 2022. Product revenue range increased to between $8.6 and $8.8 billion. GAAP expenses $3.48 to $3.63 billion, non-GAAP $3.0 to $3.1 billion.

Conference Highlights:

Reshma Kewalramani, CEO, said "With sustained and growing leadership in Cystic Fibrosis, programs in five disease areas now entering or progressing through late-stage clinical development and the next wave of innovation beginning to enter the clinic later this year, Vertex has reached a new inflection point. As we reach more CF patients, we are poised to deliver significant, durable financial returns for years to come. In parallel, we are advancing a broad and deep clinical pipeline of potentially transformative medicines across multiple serious diseases, spanning small molecules, cell and genetic therapies, and we expect this diversified portfolio of medicines will serve many more patients and drive substantial growth in the future." It is possible to develop even more effective CF treatments. The next-in-class triple combination, VX-121/tezacaftor/VX-561, is now in Phase III development enrolling patients 12 years and older, and we expect to complete enrollment by early 2023.

In July, 2022, Vertex entered into a definitive agreement to acquire ViaCyte, a privately held company focused on delivering novel stem cell-derived cell replacement therapies as a functional cure for type 1 diabetes, for $320 million in cash. Vertex anticipates the acquisition will close later this year. Also in July, Vertex entered into a research collaboration with Verve Therapeutics, focused on discovering and developing an in vivo gene editing program for a liver disease. In May, Vertex acquired Catalyst Biosciences' complement portfolio and related intellectual property for $60 million in cash.

Vertex is on track to advance one or more novel small molecule Z-AAT correctors into the clinic in 2022 for AAT Deficiency.

In Q2 2022 Vertex filed an sNDA with the FDA) and a Marketing Authorization Application (MAA) with the European Medicines Agency (EMA) for the use of Orkambi in children 12 months to less than 24 months old. The FDA PDUFA target date is September 4, 2022.In March 2022 Orkambi filed an sNDA based on in Phase 3 results in patients aged 12 to 24 months.

Vertex completed enrollment in the Phase 3 study of Trikafta in children 2 to 5 years old. The Company anticipates filing a supplementary new drug application (sNDA) with the FDA before the end of 2022.

In January 2022, the European Commission and the UK Regulatory Agency approved a label extension for Kaftrio (ivacaftor/tezacaftor/elexacaftor) in a combination regimen with ivacaftor, for the treatment of CF in children ages 6 through 11 years old who have at least one F508del mutation in the CF transmembrane conductance regulator (CFTR) gene. With these approvals, approximately 1,900 children are newly eligible.

Non-GAAP results: Net income $930 million, up 3% sequentially from $907 million, and well up from $43 million year-earlier. EPS $3.60, up 2% sequentially from $3.52, and well up from from $0.17 year-earlier.

$ millions
Q2 2022 Q1 2022 Q2 2021 y/y % change

In March, 2022 Vertex initiated inaxaplin (VX-147) in a single Phase 2/3 study in patients with two APOL1 mutations and proteinuric kidney disease.

In March, 2022, Vertex reported positive data from two Phase 2 dose-ranging acute pain studies with VX-548, one following bunionectomy surgery and the other following abdominoplasty surgery. Both studies met their primary endpoint. Vertex also intends to initiate a Phase 2 dose-ranging study of VX-548 in neuropathic pain by the end of 2022.

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.

Enrollment is complete in the ongoing CTX001 Phase 3 clinical trials in TDT and SCD, with more than 75 patients dosed to date. Vertex anticipates presenting updated data from the clinical trials, with more patients and longer follow-up, at medical conferences in 2022. Two new Phase 3 studies of CTX001 were initiated in pediatric patients with TDT and SCD. Vertex plans to submit global regulatory filings in TDT and SCD in late 2022.

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

Vertex reported positive results in two Phase 2 pain trials in March 2022. TheVX-548 Phase 2 dose ranging acute pain studies included one following bunionectomy surgery and the other following abdominoplasty surgery.

VX-880 for type 1 diabetes 150 day data was very positive; could be transformative. However, the FDA placed a clinical hold on the study in April 2022.

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 $9.3 billion, up sequentially from $8.2 billion. No debt.

Cost of revenue was $262 million. Research and development expense was $600 million. Sales, general and administrative expenses were $215 million. Acquired in-process R&D $62 million; Change in contingent consideration $49 million. Total costs and expenses were $1.09 billion, leaving operating income of $1.11 billion. Interest expense net $4 million. Other expense $78 million. Income taxes $214 million.

Q&A selective summary:

Inaxaplin for AMKD enrollment? It is a difficult population to enroll. Disease awareness is low, so are diagnosis and genotyping. We will have over 150 sites for Phase 3, there should be a smooth transition because it is a Phase 2/3 trial. We will have some Phase 2 data after we have picked a dose. Patients must have 2 APOL1 alles, reduced renal function, and proteinuria over 0.7 grams.

548 market opportunity? It really has potential across acute pain, neuroplastic pain, and musculoskeletal pain. The focus right now is acute pain. We will have about 2000 patients in 2 randomized, controlled trials. With two pain sources, we should have a broad acute pain indication. We believe it is a multi-billion dollar opportunity. "What we're imagining here with VX-548 is essentially sort of a step therapy approach where we would be sort of inserting ourselves between those initial prescription NSAs and opioids."

AATD program? We are very interested in AATD, it is a good fit for Vertex. We have several preclinical molecules for this, at least one should have an IND this year.

CTX001? We think it could address about 32,000 patients of the 150,000 sickle cell and beta thalassemia patients in the U.S. and EU.

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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