Analyst Conference Summary

Biotechnology

conference date: November 4, 2024 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2024 (third quarter, Q3 2024)

Forward-looking statements

Overview: strong revenue growth and raised guidance

Basic data (GAAP):

Revenue was $2.77 billion, up 5% sequentially from $2.65 billion, and up 12% from $2.48 billion in the year-earlier quarter.

Net income was $1.05 billion, up sequentially from negative $3.51 billion and up 1% from $1.04 billion year-earlier.

Diluted Earnings Per Share (EPS) were $4.01, up sequentially from negative $13.92 and up 1% from $3.97 year-earlier.

Guidance:

Full year 2024 product revenue increased to $10.8 to $10.9 billion.

Conference Highlights:

Reshma Kewalramani, CEO, said "The third quarter marked another period of strong progress, with continued revenue growth and outstanding execution across the business, and we are again increasing our full-year product revenue guidance. Launch preparedness is well underway as we look forward to the potential approvals of the vanzacaftor triple for cystic fibrosis and suzetrigine, a new class of medicine for moderate-to-severe acute pain. With a broad and deep pipeline and three additional programs advancing to Phase 3 development in the last quarter alone, Vertex is well positioned for continued long-term growth." Still expects five new product launches over five years.

Suzetrigine (VX-548) for acute pain NDA was accepted by the FDA on July 30, 2024. The PDUFA is January 30, 2025. Already making commercial plans. In Q3 2024 started a Phase 3 trial in diabetic peripheral neuropathy. Believes addresses a multi-billion dollar market.

In Q3 2024 started a Phase 3 study of povetacicept for IgA nephropathy.

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. PDUFA January 2, 2025. If approved will have a substantially lower royalty burden than current therapies. Vertex has completed regulatory submissions for the vanzacaftor triple in the EU, United Kingdom, Canada, Australia, New Zealand and Switzerland.

Vertex continues to work to introduce gene therapy Casgevy for sickle cell disease and transfusion-dependent beta thalassemia. First revenue was in Q3 2024.

Work continues on VX-880 and VX-264 for Type 1 diabetes, with the first VX-264 patient dosed. VX-880 presented updated positive Phase 1/2 data in Q2 2024. VS-880 trial was expanding to 50 patients and is now in the Phase 3 portion.

Povetacicept for IgAN nephropathy Phase 3 study will initiate in Q3 2024.

VX-522, a CFTR mRNA therapy multiple ascending dose portion of Phase 1/2 is underway. Expects top line data in H1 2025. Partnered with Moderna. For about 5,000 CF patients who cannot benefit from CFTR modulators.

VX 993, the next generation Nav1.8 pain inhibitor, is in Phase 1 with an IV formulation, which initiated a Phase 2 oral study in Q3 2024.

In Q2 2024 Vertex acquired Alpine Immune Services 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 of povetaciceopt for IgAN autoimmune kidney disease. But revenue from that would be in 2028.

Vertex is testing VX-670 in a Phase 1/2 trial for myotonic dystrophy type 1.

Vertex is testing VX-407 in a Phase 1 trial for autosomal dominant polycystic kidney disease (ADPKD).

Non-GAAP results: Net income $1.14 billion, up sequentially from negative $3.31 billion, and up 8% from $1.06 billion year-earlier. EPS $4.38, up sequentially from negative $12.83, and up 7% from from $4.08 year-earlier.

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

See also the Vertex Pharmaceuticals Pipeline page.

Cash and equivalents balance ended at $11.2 billion, up sequentially from $10.2. No debt.

Cost of sales was $393 million. Research and development expense was $876 million. Sales, general and administrative expenses were $372 million. Acquired in-process R&D $15 million; Change in contingent consideration $0 million. Total costs and expenses were $1.66 billion, leaving operating income of $1.12 billion. Interest income net $125 million. Other expense $17 million. Income taxes $179 million.

Q&A selective summary:

At home delivery, what is needed? Excited about ASN results for Povetacicept. In current protocol injection is delivered by a professional in the office. We are ready for it to be approved for monthly, at home, subq self administration.

Suzetrigine data in LSR, goals? We are close to having the results, they will speak for themselves, before the end of the year. We are looking for good safety and significantly significant efficacy, NPRS score. We did not power the study to measure the change from baseline 548 v. placebo because that is what we intend to do in the Phase 3 study. Phase 2 data should allow us to size the Phase 3 trial. Our confidence is high, including in patient selection criteria.

Pricing of Suzetrigine? Driven by clinical benefit and unmet need.

Suzetrigine mechanism of action is specific to Nav1.8 channels in the peripheral nervous system. Stops the propagation of action potentials.

Competing Nav 1.8 discontinuation? No surprise, many companies have worked on Nav 1.7 and 1.8. It is the holy grail of pain targets. However, channels 1.1 to 1.9 are similar, so the need to be very specific for 1.8, which out molecule is.

We are seeing a high level of enthusiasm from providers and payers for Suzetrigine. But there is often a lag between approval and the payers completing making access available. We will also look to have retail distribution in place as close to approval as we can.

Inaxaplin opportunity? Renal about 100,000 patients living with AMKD. But many are not diagnosed yet, requires genotyping. So a multi-billion dollar opportunity.

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