Vertex (VRTX) Beats on Q2 Earnings, Ups 2022 Sales Guidance

Vertex Pharmaceuticals Incorporated VRTX reported second-quarter 2022 adjusted earnings per share of $3.60, which beat the Zacks Consensus Estimate of $3.48. The company recorded earnings of 17 cents in the year-ago quarter. Strong cystic fibrosis (“CF”) product revenues and lower acquired in-process research and development expenses (“Acquired IPR&D”) boosted earnings.

Revenues of $2.2 billion, which surpassed the Zacks Consensus Estimate of $2.13 billion, comprised entirely of CF product revenues. Total product revenues rose 22% year over year, primarily driven by higher sales of Trikafta (marketed as Kaftrio in Europe).

This year so far, shares of Vertex have risen 25.2% in contrast to the industry’s 19.7% decline.


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Quarter in Detail

The company markets four CF products — Trikafta/Kaftrio, Symdeko (marketed as Symkevi in ​​Europe), Orkambi and Kalydeco.

CF product sales rose 13% year over year in the United States to $1.42 billion while sales outside the United States surged 46% to $781 million.

Trikafta generated sales worth $1.89 billion, up 50.7% year over year, driven by strong uptake in international markets as well as additional patients starting treatment with Trikafta, most notably pediatric patients (6-11 years of age) in the United States.

Symdeko/Symkevi registered sales of $43 million in the quarter, down 68% year over year.

Kalydeco recorded sales of $139 million in the quarter, down 24% year over year. Orkambi generated sales of $122 million in the reported quarter, down 44.8% from the prior-year quarter. Sales of Kalydeco, Symdeko/ Symkevi and Orkambi were hurt by patients switching to Trikafta.

Costs Rise

Adjusted operating income was $1.19 billion in the quarter compared with $71 million in the year-ago quarter due to lower acquired IPR&D costs.

In the quarter, Vertex recorded acquired IPR&D costs of $62 million compared with $958 million in the year-ago quarter. The year-ago quarter’s acquired IPR&D costs included a one-time $900 million payment made to partner CRISPR Therapeutics CRSP related to the amendment of Vertex’s collaboration with the latter.

Adjusted research and development (R&D) expenses rose 34.5% from the year-ago quarter to $515 million due to the expanding mid- and late-stage pipeline.

Adjusted selling, general and administrative (SG&A) expenses increased 12.3% to $173 million in the reported quarter due to expenses for CF launches and pre-commercial activities for exa-cel.

Oops 2022 Guidance

The company raised its previously issued product sales guidance for 2022 from a range of $8.4-$8.6 billion to $8.6-$8.8 billion, backed by robust sales of Kaftrio/Trikafta in international markets following new reimbursements recently secured in France, Spain and Italy. The updated guidance represents product revenue growth of approximately 15% at the midpoint

Combined adjusted R&D, Acquired IPR&D and SG&A expense guidance for 2022 was raised from a range of $2.82 to $2.92 billion to $3.0 to $3.1 billion to reflect the advancement of pipeline programs into late-stage clinical studies and recent M&A activity. The adjusted tax rate is expected in the range of 21-22%.

Pipeline & Other Updates

While Vertex’s main focus is on the development and strengthening of its CF franchise, the company also has a rapidly advancing mid- and late-stage clinical pipeline across six disease areas. Vertex said that programs in five disease areas are now entering or progressing through late-stage clinical development.

Vertex is co-developing a gene-editing treatment, exa-cel (formerly CTX001) in partnership with CRISPR Therapeutics in two devastating diseases — sickle cell disease and thalassemia. Phase I/II studies of exa-cel in adult transfusion-dependent b-thalassemia in Europe and sickle cell disease in the United States are ongoing. Vertex and CRISPR Therapeutics plan to file regulatory applications for exa-cel for both indications in Europe and the United Kingdom in the fourth quarter of 2022 while discussions with the FDA are ongoing.

Inaxaplin (formerly VX-147) is being developed in a single pivotal phase II/III study in patients with APOL1-mediated kidney disease, or AMKD with two APOL1 mutations and proteinuric kidney disease. Enrollment is ongoing, with more than 30 sites active in the United States. In June, the FDA granted Breakthrough Therapy Designation (BTD) to inaxaplin for treating APOL1-mediated focal segmental glomerulosclerosis, or FSGS based on phase II proof-of-concept data, which showed a 47.6% reduction in proteinuria.

VX-548, a novel first-in-class, non-opioid NaV1.8 inhibitor, is being evaluated in two phase II acute pain studies, one following bunionectomy surgery and the other following abdominoplasty surgery. In March 2022, Vertex announced positive data from the two phase II studies on VX-548. The studies met their primary endpoint and established proof of concept for VX-548. Based on this data, the company plans to advance VX-548 into pivotal phase III development for acute pain in the fourth quarter of 2022. A phase 2 dose-ranging study of VX-548 in neuropathic pain is expected to be initiated by the end of this year.

Vertex says that exa-cel, inaxaplin and VX-548 all represent a multibillion-dollar opportunity.

A phase I/II study is ongoing on VX-880, Vertex’s stem cell-derived fully differentiated islet cell replacement therapy for the treatment of type I diabetes (T1D) with impaired hypoglycemic awareness and severe hypoglycemia. While the program was placed on a clinical hold by the FDA in May, based on insufficient information for dose escalation, data available from the two patients treated at half dose demonstrated proof-of-concept. In July, the FDA lifted the clinical hold and the study resumed enrollment in the United States. Three patients have been treated in the phase I/II study to date

Zacks Rank & Stocks to Consider

Vertex currently carries a Zacks Rank #3 (Hold).

Vertex Pharmaceuticals Incorporated Price, Consensus and EPS Surprise

Vertex Pharmaceuticals Incorporated Price, Consensus and EPS Surprise

Vertex Pharmaceuticals Incorporated price-consensus-eps-surprise-chart | Vertex Pharmaceuticals Incorporated Quote

Some better-ranked stocks in the biotech sector include BioNTech BNTX and Deciphera Pharmaceuticals DCPH, both with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BioNTech’s stock is down 30% this year so far. Earnings estimates for 2022 have gone up from $33.18 per share to $34.28 per share while that for 2023 has increased from $14.28 per share to $20.17 per share over the past 30 days.

Earnings of BioNTech beat estimates in all the last four quarters, the average surprise being 56.87%.

Deciphera Pharmaceuticals’ loss per share estimates for 2022 have narrowed from $2.62 to $2.56 in the past 30 days. DCPH’s stock has risen 72.0% in the year-to-date period.

Earnings of Deciphera Pharmaceuticals missed estimates in three of the last four quarters and beat the mark once, the average negative surprise being 2.0%.

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Vertex Pharmaceuticals Incorporated (VRTX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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