Analyst Conference Summary

Biotechnology

conference date: May 6, 2024 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2024 (first quarter, Q1 2024)

Forward-looking statements

Overview: Productive quarter with strong revenue growth.

Basic data (GAAP):

Revenue was $2.69 billion, up 7% sequentially from $2.52 billion, and up 13% from $2.37 billion in the year-earlier quarter.

Net income was $1.10 billion, up 13% sequentially from $968 million and up 57% from $699 million year-earlier.

Diluted Earnings Per Share (EPS) were $4.21, up 13% sequentially from $3.71 and up 62% from $2.69 year-earlier.

Guidance:

Reitereated 2024 full year product revenue $10.55 to $10.75 billion.

Conference Highlights:

Reshma Kewalramani, CEO, said "Vertex delivered a strong start to 2024 with 13 percent product revenue growth and outstanding execution across the business. This quarter, we continued to expand our leadership in CF including completion of the regulatory submissions for the vanzacaftor triple, advanced the global launch of Casgevy, and initiated the rolling submission for suzetrigine in moderate-to-severe acute pain, while progressing our broad and deep pipeline of potentially transformative medicines. We also recently announced the acquisition of Alpine Immune Sciences, a compelling strategic fit. We look forward to welcoming the Alpine team and together accelerating the development of povetacicept, a potential best-in-class treatment for IgAN, and fully exploring povetacicept’s pipeline-in-a-product potential."

Vertex is acquiring Alpine Immune Services, closing expected in Q2 for approximately $4.9 billion in cash. Alpine's povetacicept is a highly potent and effective dual antagonist of BAFF (B cell activating factor) and APRIL (a proliferation-inducing ligand). Ready for Phase 3 trial for IgAN autoimmune kidney disease.

In Q1 2024 Vanzacaftor triple combo CF therapy three Phase 3 studies were reported as positive for cystic fibrosis. The NDA to the FDA and MAA to the EMA were filed in Q2 2024. If approved will have a substantially lower royalty burden than current therapies.

Casgevy [formerly Exa-cel (Exagamglogene autotemcel)] for sickle cell disease and transfusion-dependent beta thalassemia received FDA approvals in January 2024. Also approved in Great Britain. Positive CHMP opinion in EU. All revenue will be booked by Vertex, the royalties to Crispr will be included in Cost of Goods sold. Making profress with payers, patients and doctors. Now has more than 25 activated centers. 5 patients already have cells collected (as of April 2024).

VX-670 for DM1 achieved a clinical milestone in Q1 2024, so a $75 million payment is due to Entrada.

VX-548 for acute pain (now suzetrigine) completed enrolling Phase 3 trials in Q4 2023. Positive results were announced in Q1 2024. A rolling NDA was started and is on track to complete in Q2 2024. The Phase 2 trial in peripheral neuropathic pain announced positive results in Q4 2023, with Phase 3 trial to begin in 2H 2024. Already making commercial plans.

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. VS-880 trial resumed in Q2 2024 and is fully enrolled.

VX-522, partnered with Moderna, completed enrollment in a single ascending dose study for CF. In Q1 2024 initiated a multiple ascending dose Phase 1/2 study. Data is expected by early 2025.

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

Non-GAAP results: Net income $1.24 billion, up 13% sequentially from $1.10 billion, and up 56% from $794 million year-earlier. EPS $4.76, up 13% sequentially from $4.20, and up 56% from from $3.05 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 $14.6 billion, up sequentially from $13.7 billion. No debt.

Cost of sales was $343 million. Research and development expense was $789 million. Sales, general and administrative expenses were $343 million. Acquired in-process R&D $77 million; Change in contingent consideration $0 million. Total costs and expenses were $1.55 billion, leaving operating income of $1.14 billion. Interest income net $171 million. Other expense $31 million. Income taxes $180 million.

Q&A selective summary:

Sweat chloride benefit, label, for Vanzacaftor? Expect it will be in the label. Not negotiating on label with FDA yet.

VX-548? In the acute filing, we are submitting all the data generated. Phase 3 results are versus placebo as primary endpoint, but we have data v. opioids. Re reimbursement, we see that as a very important place for policy.

Skeletal pain plans? We see 3 distintct areas: acute, neuropathic, everything else. We intend to serve all patients eventually, including skeletal pain. But one step at a time.

We are looking for pain molecules that are both oral and by injection. 548 is oral only. Formulary discussions are separate from those with policy makers.

We should be putting out more data, published or at meetings, this fall.

Size of CF franchise in Brazil? We estimate around 1,500 patients over the age of 6 in Brazil, but some are already on medicine.

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