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Vertex (VRTX) Q1 Earnings Beat Estimates, Revenues Up Y/Y

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Vertex Pharmaceuticals Incorporated (VRTX - Free Report) reported first-quarter 2021 adjusted earnings per share of $2.98, which beat the Zacks Consensus Estimate of $2.77. Earnings rose 16% year over year. Strong cystic fibrosis product revenues led to higher earnings.

Revenues of $1.72 billion surpassed the Zacks Consensus Estimate of $1.66 billion, comprising almost fully of CF product revenues. Total revenues rose 13.8% year over year.

Product revenues rose 14.0% in the quarter driven by the rapid uptake of Trikafta in Europe and continued growth in the United States. First-quarter revenues also included a one-time benefit of approximately $50 million from channel inventory fluctuations. Product revenues rose 6% to $1.25 billion in the United States and 43% to $470 million outside the country.

The company recorded $1.0 million of collaborative revenues during the reported quarter.

Vertex’s stock has declined 10.4% this year so far compared with a decrease of 0.6% for the industry.

 

 

CF Franchise Sales Rise

Vertex’s newest drug, Trikafta, generated sales worth $1.19 billion, up 33.3% year over year driven by the high level of treatment penetration in the United States and strong launch in international markets.

Trikafta was approved by the brand name of Kaftrio in Europe in August 2020. It saw substantial uptake across all European countries where the company secured reimbursement agreements, most importantly the large markets of Germany and United Kingdom

Symdeko/Symkevi registered sales of $125 million in the quarter, down 27.7% year over year.

Kalydeco recorded sales of $186 million in the quarter, reflecting a 12.7% decrease year over year. Orkambi generated sales of $219 million in the reported quarter, down 6.4%. Sales of Kalydeco, Symdeko/ Symkevi and Orkambi were hurt by patient switching to Trikafta.

Costs Rise

Adjusted operating income rose 14% to $1.0 billion in the quarter driven by higher revenues and cost control.

Adjusted research and development (R&D) expenses rose 12.5% to $379 million due to expansion of CF and non-CF pipeline.

Adjusted selling, general and administrative (SG&A) expenses increased 7.9% to $151 million in the reported quarter due to investments made to support the expansion of the CF business.

2021 Guidance

The company maintained its previously issued financial guidance for 2021.

The company expects product revenues from CF products in the range of $6.7-$6.9 billion in 2021. The guidance, at the midpoint, reflects approximately 10% growth over 2020.

Combined adjusted R&D and SG&A expense for 2021 is expected in the band of $2.25 to $2.30 billion. Adjusted tax rate is expected in the range of 21-22%.

Pipeline Update

While Vertex’s main focus is on the development and strengthening of its CF franchise, the company also has a rapidly advancing early-stage portfolio in six additional diseases beyond CF.

Vertex is co-developing a CRISPR/Cas9-based gene editing therapy, CTX001, in partnership with CRISPR Therapeutics (CRSP - Free Report) for two devastating diseases — sickle cell disease and thalassemia. The company expects to complete enrolment in ongoing trials for CTX001 in sickle cell disease and beta thalassemia this year. This week, European Medicines Agency (EMA) granted Priority Medicines (PRIME) designation to CTX001. Earlier this month, Vertex increased its investment in the collaboration. Under the amended deal, Vertex will lead the global development and future commercialization of CTX001.

Enrolment and dosing is complete in a phase II study on VX-864, Vertex’s small molecule corrector for the Alpha-1 Antitrypsin (AAT) disease. Data from the study is expected in the second quarter of 2021.

Enrolment is underway in a phase II study on VX-147, its first oral small molecule medicine in APOL1-mediated focal segmental glomerulosclerosis (FSGS). Data from the study is expected in the second half of 2021.

A phase I/II study was initiated on VX-880 for the treatment of type I diabetes (T1D) in March. VX-880 is Vertex’s first of the two investigational programs for the transplant of functional islets into patients. VX-880, is for the transplantation of islet cells alone, using immunosuppression to protect the implanted cells. The second program will involve the implantation of the islet cells inside an immunoprotective device.

Our Take

Vertex beat both earnings and sales estimates in the first quarter and maintained product sales outlook for the year. 

The revenue guidance includes Vertex’s expectations for its currently marketed drugs plus label expansion of Trikafta for children aged 6-11 years in the United States. A supplemental new drug application (sNDA) seeking approval of Trikafta for the above pediatric patient population is under priority review in the United States with a decision expected on Jun 8. Though Trikafta is expected to remain a key revenue driver in 2021, additional ex-US penetration and reimbursement agreements are uncertain. 

Nonetheless, Vertex’s non-CF pipeline is progressing rapidly with data from multiple programs expected in 2021.

Zacks Rank and Stocks to Consider

Vertex currently carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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 from the biotech sector are Repligen Corporation (RGEN - Free Report) and Nabriva Therapeutics , both with a Zacks Rank #2 (Buy).

Repligen’s shares have gained 11.2% this year so far. Its earnings estimates for 2021 have risen from $1.87 to $1.91 over the past 60 days.

Nabriva’s loss estimates have narrowed from $3.30 per share to $1.95 per share for 2021 and from $2.25 per share to $1.23 per share in the past 60 days.

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