Analyst Conference Summary


Vertex Pharmaceuticals

conference date: February 7, 2022 @ 1:30 PM Pacific Time
for quarter ending: December 31, 2022 (fourth quarter, Q4, 2022)

Forward-looking statements

Overview: continued strong revenue and profit growth.

Basic data (GAAP):

Revenue was $2.30 billion, down 1% sequentially from $2.33 billion, and up 11% from $2.07 billion in the year-earlier quarter.

Net income was $819 million, down 12% sequentially from $931 million and up 6% from $770 million year-earlier.

Diluted Earnings Per Share (EPS) were $3.15, down 12% sequentially from $3.59 and up 5% from $3.00 year-earlier.


For the full year 2023 product revenue range $9.55 to $9.7 billion. GAAP expenses $4.35 to $4.6 billion. Non-GAAP expenses $3.9 to $4.0 billion. Non-GAAP tax rate 21% to 22%.

Conference Highlights:

Reshma Kewalramani, CEO, said "Our progress in 2022 lays the foundation for treating more people with cystic fibrosis, launching multiple new therapies in the near term, achieving important clinical milestones, and driving continued significant growth for many years to come." A better-than-Trikafta triplet is now in Phase 3. A $3 billion share repurchase program was authorized on February 1, 2023. Given the promise of the pipeline, is conintuing to invest heavily in R&D.

On September 27, 2022, Vertex closed the acquisition of ViaCyte, a regenerative medicine company focused on delivering novel stem cell-derived cell replacement therapies as a potential functional cure for type 1 diabetes. In July, 2022, Vertex had 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.

Exa-cel (Exagamglogene autotemcel) for sickle cell disease and transfusion-dependent beta thalassemia completed EU regulatory submissions in December 2022, and they have been accepted for review. The U.S. BLA is expected to complete submission in Q1 2023. This is a CRISPR gene-edited therapy. Believes about 150,000 patients in U.S. or Europe. Believes acceptance of gene editing is growing. Preparing for commercial launch.

Vertex began a Phase 1 trial of VX-634, a novel small molecule Z-AAT corrector, in Q4 2022. A trial of VX-864 is also planned to start soon. Both are for AAT Deficiency.

In Q3 2022 the FDA approved an sNDA for the use of Orkambi in children 12 months to less than 24 months old. A Marketing Authorization Application (MAA) with the European Medicines Agency (EMA) has also been filed.

Vertex completed enrollment in the Phase 3 study of Trikafta in children 2 to 5 years old. The Company made a supplementary new drug application (sNDA) with the FDA and has been assigned a PDUFA of April 28, 2023. Also filed in the EU. Kalydeco filed in US and EU for children under 4 months of age, with PDUFA May 3, 2023.

Vanzacaftor/tezacaftor/deutivacaftor, for cystic fibrosis: Vertex completed enrollment in the pivotal SKYLINE 102 and SKYLINE 103 trials. Vertex expects to complete these studies by the end of 2023. Vertex has also initiated a study of vanzacaftor/tezacaftor/deutivacaftor in children with CF between 6 and 11 years of age.

VX-864 for AAT deficiency Phase 2 study begun in Q4 2022. The VX-634 Phase 1 study continues.

In Q4 2022, Vertex initiated a Phase 2 dose-ranging study of VX-548 in patients with diabetic peripheral neuropathy.

Non-GAAP results: Net income $978 million, down 6% sequentially from $1,039 million, and up 26% from $777 million year-earlier. EPS $3.76, down 6% sequentially from $4.01, and up 25% from from $3.02 year-earlier.

$ millions
Q4 2022 Q3 2022 Q4 2021 y/y % change

See also the Vertex Pharmaceuticals Pipeline page.

Cash and equivalents balance ended at $10.8 billion, up sequentially from $9.8 billion. No debt.

Cost of sales was $283 million. Research and development expense was $694 million. Sales, general and administrative expenses were $267 million. Acquired in-process R&D $23 million; Change in contingent consideration $2 million. Total costs and expenses were $1.27 billion, leaving operating income of $1.03 billion. Interest income net $86 million. Other income $43 million. Income taxes $258 million.

Full year 2022 results: Revenue $8.93 billion; GAAP net income $3.32 billion, EPS $12.82; non-GAAP net income $3.86 billion, EPS $9.67.

Q&A selective summary:

VX880 data this year? Naked cell program. Proof of concept demonstrated. Now fully enrolled Part B, full dose, but staggered. Will present data at diabetes congresses from more patients. Device challenges have been fibrosis and inability for oxygen and nutrients to get in. Ours is a channel array device that we hope will overcome those problems. No evidence of fibrosis in animal models so far.

VX548 data release plans? Plan is to complete all 3 Phase 3 studies, by early 2024, will share all the data at the same time.

mRNA 522 plans? Main challenge for CF patients has been delivery. Had a breakthrough a year ago. We can now deliver qualitative and quantitative to cells. We have had success in animal models.

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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 2023 William P. Meyers