Analyst Conference Summary

Biotechnology

conference date: August 1, 2023 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2023 (second quarter, Q2 2023)

Forward-looking statements

Overview: Strong growth, increased guidance.

Basic data (GAAP):

Revenue was $2.49 billion, up 5% sequentially from $2.37 billion, and up 14% from $2.20 billion in the year-earlier quarter.

Net income was $916 million, up 31% sequentially from $700 million and up 13% from $811 million year-earlier.

Diluted Earnings Per Share (EPS) were $3.52, up 31% sequentially from $2.69 and up 12% from $3.13 year-earlier.

Guidance:

Increased FY 2023 CF product revenue to $9.7 to $9.8 billion.

Conference Highlights:

Reshma Kewalramani, CEO, said "In the second half of the year, we look forward to expanding our leadership in Cystic Fibrosis; continuing to prepare for several near-term potential launches, starting with exa-cel; and completing major Phase 3 trials including VX-548 in acute pain and the vanzacaftor triple in cystic fibrosis."

Vanzacaftor triple combo CF therapy Phase 3 studies are expected to complete by end of 2023.

In April 2023 Vertex received a positive CHMP opinion for Orkambi for FC in children aged 1 to 2.

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 was submitted; December 8, 2023 PDUFA date. This is a CRISPR gene-edited therapy. Believes about 150,000 patients in U.S. or Europe. The FDA has also accepted a BLA of exa-cel for transfusion-dependent beta thalassemia, PDUFA March 30, 2024.

In April, 2023, Vertex received FDA approval for Trikafta in children 2 to 5 years old. Also filed in the EU. Kalydeco filed in US and EU for children under 4 months of age, with PDUFA May 3, 2023.

VX-548 for acute pain continues to enroll in the Phase 3 trial. The diabetic peripheral neuropathy Phase 2 trial is now fully enrolled.

Work continues on VX-880 and VX-264 for Type 1 diabetes, with the first VX-264 patient dosed. Work continues on VX-864 for Alpha-1 Antitrypsin Deficiency.

VX-522, partnered with Moderna, is a single ascending dose study for CF.

Non-GAAP results: Net income $1.014 billion, up 28% sequentially from $794 million, and up 9% from $931 million year-earlier. EPS $3.89, up 28% sequentially from $3.05, and up 8% from from $3.60 year-earlier.

I did not see or here a breakdown of revenue for Syhmdeko, Orkambi, or Kalydeco. Lumped them into Other CF.

See also the Vertex Pharmaceuticals Pipeline page.

Cash and equivalents balance ended at $12.6 billion, up sequentially from $11.5 billion. No debt.

Cost of sales was $309 million. Research and development expense was $786 million. Sales, general and administrative expenses were $263 million. Acquired in-process R&D $111 million; Change in contingent consideration $0 million. Total costs and expenses were $1.47 billion, leaving operating income of $1.03 Billion. Interest income net $133 million. Other income $2 million. Income taxes $246 million.

Q&A selective summary:

Exa-cel Advisory Committee? There will be a committee meeting given the new mechanism of action. Do not have a date yet. Will learn more closer to it. Looking forward to it.

Exa-cel launch? Need to secure access and reimbursement. Doing all we can. Depends too on interest of physicians and patients, which appears high. Gene-therapy involves a multi-month process, so it will be slower than our CF launches. It is a multi-billion dollar market opportunity. Re a warranty, we are looking at a range of options, payers vary in their attitudes.

Diabetes next readouts? 880 at fall diabetes conference. For 264 just started dosing, so will need to wait for a milestone.

VX-548? Guideline updates might be helpful. Policies are likely to change their focus because they were abour restricting pain prescriptions, but could become supporting of non-opioid medicines.

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