Vertex: Q2 highlights and key takeaways

Vertex Pharmaceuticals presented its 2017 second-quarter results on July 27, reporting solid top- and bottom-line results while clarifying when and what to expect from a fleet of triple combinations that could once again transform the treatment of cystic fibrosis (CF).

Chugging along

Sales of both Vertex’s marketed CF drugs came in ahead of analyst projections, with Kalydeco (ivacaftor) posting $190 million and Orkambi (ivacaftor/lumacaftor) bringing in $324 million. The Street was expecting $183 million and $303 million, respectively. Despite their strong growth trajectories, the company declined to boost its revenue guidance for the year, leading some analysts to speculate that it should make for an easy bar to clear.


While Orkambi sales beat the consensus estimate last quarter, Vertex’s progress in securing access throughout much of Europe, once again reminding observers of what many regard as the drug’s disappointing clinical profile and the commercial complications that arose as a result.

Stuart Arbuckle, Vertex’s chief commercial officer, said that reimbursement agreements have been reached in Austria, Denmark, Germany, Ireland, Italy and Luxemburg, but discussions are still ongoing in France, the Netherlands and the UK. “There's a clinical benefit assessment, the pharmacoeconomic assessment, and then, you're into the pricing discussions, and we're through those first two,” he noted.

Triplet timeline

Vertex provided the Street a little more colour around when to expect the next shoes to drop for its triple combinations for CF, with the first of these coming in early 2018 when the company will report additional mid-stage readouts for regimens containing VX-152 and VX-659, along with an initial look at VX-445.

Encouraging results for regimens containing the two former CFTR correctors as well as VX-440 were reported earlier this month, causing Vertex shares to climb more than 20 percent, boosting its market cap by $8.5 billion.

See also KOL Views Results: Leading pulmonologist excited about potential of Vertex’s CF triplets but concerned about economic consequences

At the same time as the next readouts, Vertex also plans to be in a position to reveal which and how many of the triplets it will move forward into Phase III testing, which should also get underway next year.

Interestingly, Vertex noted that it hopes a deuterated version of ivacaftor called , which was recently acquired from Concert Pharmaceuticals, is likely to be included in one or more of the triple combinations – though it is unlikely to be in the first wave of those moving into Phase III testing, according to Cowen analyst Phil Nadeau.

The leftovers

Vertex’s small molecule CFTR potentiator/corrector combinations are drastically expanding the CF addressable population, but they will not be effective for certain subgroups. The company is exploring several avenues that it hopes will work for treating these other patients.

CF caused by nonsense mutations is one such example, according to Jeffrey Leiden, president and CEO of Vertex, who noted that the company is working on things like small molecule ENaC inhibitors, CRISPR gene editing and mRNA therapeutics.

Data for its lead ENaC inhibitor, VX-371, should be available this half, though the other two modalities are still several years away from being ready for human testing.

“The key issue there is going to be delivery. I actually think the gene editing and the ability for RNA to make CFTR is a relatively straightforward problem. The tough problem here is delivery and we're working on that in parallel and as we've said, we do think that's going to take a number of years to bring forward into the clinic,” said Leiden.

Capital allocation

One by-product of Vertex’s progress in CF, where the number of untreated patients is dwindling with each incremental success, is that investors will soon start to wonder where the company will turn next for growth.

CFO Ian Smith noted that Vertex currently has a lot of financial flexibility. Specifically, the company has an “$800-million debt capacity at the moment on the balance sheet that we have not yet drawn down on, plus the $1.7 billion of cash and a positive cash flow, we're in a very nice position to think about how we allocate that cash and how we apply it.”

Smith suggested early stage deals will remain the focus for Vertex’s business development department. “We may just broaden our pipeline beyond CF with earlier stage type deals that relate to asset acquisitions or targets in IP acquisitions and knowledge and assays and small M&A-type ideas that we look at as well. We're very sensitive to looking at the capital structure of the company. We're still progressing and I think our focus is on earlier stage assets of high science in disease areas that are consistent with cystic fibrosis,” he remarked.

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