Analyst Conference Summary

Biotechnology

conference date: November 6, 2023 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2023 (third quarter, Q3 2023)

Forward-looking statements

Overview: Strong growth, increased guidance.

Basic data (GAAP):

Revenue was $2.48 billion, down 0.4% sequentially from $2.49 billion, and up 6% from $2.33 billion in the year-earlier quarter.

Net income was $1.04 million, up 13% sequentially from $916 million and up 11% from $931 million year-earlier.

Diluted Earnings Per Share (EPS) were $3.97, up 13% sequentially from $3.52 and up 11% from $3.59 year-earlier.

Guidance:

Raised full year revenue to $9.85 billion. Non-GAAP tax rate reduced 1% to 20% to 21%.

Conference Highlights:

Reshma Kewalramani, CEO, said "Vertex has delivered another strong quarter across the business. We remain relentless in our commitment to reach more patients with our cystic fibrosis medicines, while preparing for the potential launch of exa-cel in multiple geographies. Our R and D pipeline continues to make remarkable progress and we have a milestone-rich period coming up, with multiple major, near-term milestones, including completion of the Phase 3 pivotal trials for the vanzacaftor triple in cystic fibrosis and VX-548 in acute pain, as well as the Phase 2 VX-548 study data read-out in diabetic peripheral neuropathy."

Vanzacaftor triple combo CF therapy three Phase 3 studies are expected to complete by end of 2023. Data will be shared in early 2024. Believes will be more effective than Trikafta and will not need to pay a royalty.

Enrolling patients in Phase 2/3 trial of inaxaplin for Alpha-1 Antitrypsin Deficiency (AMKD).

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 32,000 patients in U.S. and Europe. The FDA has also accepted a BLA of exa-cel for transfusion-dependent beta thalassemia, PDUFA March 30, 2024. EU and UK reviews are underway. Reminded that getting a patient through treatment can take several months.

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

VX-548 for acute pain continues to enroll in the Phase 3 trial. Data due in early 2024. The diabetic peripheral neuropathy Phase 2 trial is now fully enrolled, with data due in late 2023.

Work continues on VX-880 and VX-264 for Type 1 diabetes, with the first VX-264 patient dosed. VX-880 presented positive Phase 1/2 data in October 2023.

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

Enrolling healthy volunteers with VX-634 and VX-668 for Alpha-1 antitrypsin deficiency.

Non-GAAP results: Net income $1.06 billion, up 5% sequentially from $1.01 billion, and up 2% from $1.04 billion year-earlier. EPS $4.08, up 5% sequentially from $3.89, and up 2% from from $4.01 year-earlier.

I did not see or hear 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 $11.9 billion, down sequentially from $12.6 billion. No debt.

Cost of sales was $319 million. Research and development expense was $810 million. Sales, general and administrative expenses were $264 million. Acquired in-process R&D $52 million; Change in contingent consideration $1 million. Total costs and expenses were $1.45 billion, leaving operating income of $1.04 billion. Interest income net $157 million. Other expense $16 million. Income taxes $144 million.

Q&A selective summary:

AAT difficulties? VX-864 issue was a non-serious rash. Molecule specific, not mechanism of action. The newer molecules are still in Phase 1, we will pick one or both when we have results.

Vanzacaftor? Intent is for global submissions and launch. The study is head-to-head with Trikafta.

VX-548 program? Three trials. Unblinding at same time is because goal is to get broad, moderate-to-severe pain label. PNP, or Peripheral Neuropathic Pain, is a bundle of conditions. About 20% of PNP patients have DPN, diabetic peripheral neuropathy. 60% are LSR, lumbosacral radiculopathy. Lyrica (Pregabalin) is the current drug for the condition.

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