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Vertex (VRTX) Q1 Earnings Top Estimates, Revenues Up Y/Y
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Vertex Pharmaceuticals Incorporated (VRTX - Free Report) reported adjusted earnings per share (EPS) of $3.05 in first-quarter 2023, beating the Zacks Consensus Estimate and our model estimate of $2.95 and $2.92, respectively. The adjusted EPS fell 13% year over year, on account of higher research and development expenses incurred during the quarter, which was partially offset by strong growth in product revenues.
The company reported total revenues of $2.37 billion, comprising fully of cystic fibrosis (“CF”) product revenues. The figure surpassed the Zacks Consensus Estimate and our model estimates of $2.31 billion and $2.29 billion, respectively. Total revenues rose 13% year over year, primarily driven by higher international sales of Trikafta (marketed as Kaftrio in Europe).
Quarter in Detail
The company markets four CF products — Trikafta/Kaftrio, Symdeko (marketed as Symkevi in Europe), Orkambi and Kalydeco.
CF product sales rose 3% year over year in the United States to $1.40 billion, while sales outside the United States surged 33% to $971.0 million.
Trikafta generated sales worth $2.10 billion, up 19% year over year, driven by the strong uptake in international markets and additional patients starting treatment with Trikafta, most notably pediatric patients (6-11 years of age) in the United States. Trikafta sales beat our model estimate of $2.04 billion.
Sales from other CF products, namely Symdeko/Symkevi, Kalydeco and Orkambi, were down 17.2% year over year to $278.1 million. Sales of these drugs were hurt by patients switching to Trikafta.
Costs Rise
Adjusted research and development (R&D) expenses rose 28.1% from the year-ago quarter’s levels to $663.5 million due to the expansion of the company’s mid- and late-stage pipeline.
Adjusted selling, general and administrative (SG&A) expenses increased 17.6% to $196.9 million in the reported quarter, due to expenses for CF launches and pre-commercial activities for exa-cel.
During the fourth quarter, Vertex recorded acquired IPR&D costs of $347.1 million compared with $2.0 million in the year-ago quarter.
2023 Guidance
The company reiterated its 2023 guidance. Management expects total revenues from CF products in the range of $9.55-$9.70 billion for 2023, suggesting a 7-9% year-over-year growth.
For the full year, management expects to record adjusted combined R&D, Acquired IPR&D and SG&A expenses in the band of $3.9-$4.0 billion. The adjusted tax rate is expected in the range of 21-22%.
Shares were down 2.1% in the after-market trading on Mar 1, post the earnings announcement. This was likely due to the unchanged guidance despite Trikafta’s better-than-expected sales performance during the quarter. In the year so far, the stock has risen 19.5% against the industry’s 6.2% fall.
Image Source: Zacks Investment Research
Pipeline & Other Updates
Last December, the FDA accepted the company’s IND application seeking to start clinical studies on VX-522, an investigational mRNA-based therapy for CF indication. With this therapy, management intends to target a patient population who still cannot benefit from its four marketed CF medicines. Earlier this year, management started a single ascending dose (SAD) study on VX-522 in patients with CF, which is expected to be completed by 2023-end. It also plans to start a multiple ascending dose (MAD) study later this year.
VX-522 is being developed in collaboration with Moderna (MRNA - Free Report) . Vertex and Moderna entered into a collaboration in 2016 to discover and develop mRNA therapeutics for CF. Per the terms of the collaboration, Vertex is responsible for leading the preclinical and clinical development of therapies under this collaboration. Moderna is responsible for mRNA and lipid nanoparticle (LNP) process development and manufacturing. Moderna is also eligible to receive milestone payments and royalties on sales of potential products resulting from this collaboration.
Apart from CF, Vertex is rapidly advancing its pipeline consisting of rapidly advancing mid- and late-stage candidates across six indications. Vertex stated that programs in five disease areas are entering or progressing through late-stage clinical development.
Vertex is co-developing a gene-editing treatment, exa-cel, in partnership with CRISPR Therapeutics (CRSP - Free Report) in two devastating diseases — transfusion-dependent beta thalassemia (TDT) and sickle cell disease (SCD). Last month, Vertex and partner CRISPR Therapeutics announced the completion of the rolling biologics license application (BLA) submission to the FDA seeking approval for exa-cel in SCD and TDT indications. CRISPR Therapeutics and Vertex also filed similar regulatory submissions for exa-cel in Europe, which were validated this January. Management expects the CRSP-partnered candidate to be its next commercial launch.
Vertex continues to enroll study participants in the ongoing pivotal phase III study evaluating its non-opioid NaV1.8 inhibitor VX-548, as a potential treatment for moderate to severe acute pain following bunionectomy or abdominoplasty surgery. This study is expected to be completed by 2023-end or early 2024. A phase II dose-ranging study on VX-548 in neuropathic pain has also been initiated.
In the past 60 days, estimates for Ligand Pharmaceuticals’ 2023 EPS have increased from $3.30 to $4.16. During the same period, the earnings estimates per share for 2024 have risen from $3.10 to $4.58. Shares of Ligand Pharmaceuticals have gained 14.9% in the year-to-date period.
Earnings of Ligand beat estimates in one of the last four quarters, while missing the mark on the other three occasions. On average, the company’s earnings witnessed a negative surprise of 10.07%. In the last reported quarter, Ligand’s earnings beat estimates by 10.57%.
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Vertex (VRTX) Q1 Earnings Top Estimates, Revenues Up Y/Y
Vertex Pharmaceuticals Incorporated (VRTX - Free Report) reported adjusted earnings per share (EPS) of $3.05 in first-quarter 2023, beating the Zacks Consensus Estimate and our model estimate of $2.95 and $2.92, respectively. The adjusted EPS fell 13% year over year, on account of higher research and development expenses incurred during the quarter, which was partially offset by strong growth in product revenues.
The company reported total revenues of $2.37 billion, comprising fully of cystic fibrosis (“CF”) product revenues. The figure surpassed the Zacks Consensus Estimate and our model estimates of $2.31 billion and $2.29 billion, respectively. Total revenues rose 13% year over year, primarily driven by higher international sales of Trikafta (marketed as Kaftrio in Europe).
Quarter in Detail
The company markets four CF products — Trikafta/Kaftrio, Symdeko (marketed as Symkevi in Europe), Orkambi and Kalydeco.
CF product sales rose 3% year over year in the United States to $1.40 billion, while sales outside the United States surged 33% to $971.0 million.
Trikafta generated sales worth $2.10 billion, up 19% year over year, driven by the strong uptake in international markets and additional patients starting treatment with Trikafta, most notably pediatric patients (6-11 years of age) in the United States. Trikafta sales beat our model estimate of $2.04 billion.
Sales from other CF products, namely Symdeko/Symkevi, Kalydeco and Orkambi, were down 17.2% year over year to $278.1 million. Sales of these drugs were hurt by patients switching to Trikafta.
Costs Rise
Adjusted research and development (R&D) expenses rose 28.1% from the year-ago quarter’s levels to $663.5 million due to the expansion of the company’s mid- and late-stage pipeline.
Adjusted selling, general and administrative (SG&A) expenses increased 17.6% to $196.9 million in the reported quarter, due to expenses for CF launches and pre-commercial activities for exa-cel.
During the fourth quarter, Vertex recorded acquired IPR&D costs of $347.1 million compared with $2.0 million in the year-ago quarter.
2023 Guidance
The company reiterated its 2023 guidance. Management expects total revenues from CF products in the range of $9.55-$9.70 billion for 2023, suggesting a 7-9% year-over-year growth.
For the full year, management expects to record adjusted combined R&D, Acquired IPR&D and SG&A expenses in the band of $3.9-$4.0 billion. The adjusted tax rate is expected in the range of 21-22%.
Shares were down 2.1% in the after-market trading on Mar 1, post the earnings announcement. This was likely due to the unchanged guidance despite Trikafta’s better-than-expected sales performance during the quarter. In the year so far, the stock has risen 19.5% against the industry’s 6.2% fall.
Image Source: Zacks Investment Research
Pipeline & Other Updates
Last December, the FDA accepted the company’s IND application seeking to start clinical studies on VX-522, an investigational mRNA-based therapy for CF indication. With this therapy, management intends to target a patient population who still cannot benefit from its four marketed CF medicines. Earlier this year, management started a single ascending dose (SAD) study on VX-522 in patients with CF, which is expected to be completed by 2023-end. It also plans to start a multiple ascending dose (MAD) study later this year.
VX-522 is being developed in collaboration with Moderna (MRNA - Free Report) . Vertex and Moderna entered into a collaboration in 2016 to discover and develop mRNA therapeutics for CF. Per the terms of the collaboration, Vertex is responsible for leading the preclinical and clinical development of therapies under this collaboration. Moderna is responsible for mRNA and lipid nanoparticle (LNP) process development and manufacturing. Moderna is also eligible to receive milestone payments and royalties on sales of potential products resulting from this collaboration.
Apart from CF, Vertex is rapidly advancing its pipeline consisting of rapidly advancing mid- and late-stage candidates across six indications. Vertex stated that programs in five disease areas are entering or progressing through late-stage clinical development.
Vertex is co-developing a gene-editing treatment, exa-cel, in partnership with CRISPR Therapeutics (CRSP - Free Report) in two devastating diseases — transfusion-dependent beta thalassemia (TDT) and sickle cell disease (SCD). Last month, Vertex and partner CRISPR Therapeutics announced the completion of the rolling biologics license application (BLA) submission to the FDA seeking approval for exa-cel in SCD and TDT indications. CRISPR Therapeutics and Vertex also filed similar regulatory submissions for exa-cel in Europe, which were validated this January. Management expects the CRSP-partnered candidate to be its next commercial launch.
Vertex continues to enroll study participants in the ongoing pivotal phase III study evaluating its non-opioid NaV1.8 inhibitor VX-548, as a potential treatment for moderate to severe acute pain following bunionectomy or abdominoplasty surgery. This study is expected to be completed by 2023-end or early 2024. A phase II dose-ranging study on VX-548 in neuropathic pain has also been initiated.
Vertex Pharmaceuticals Incorporated Price
Vertex Pharmaceuticals Incorporated price | Vertex Pharmaceuticals Incorporated Quote
Zacks Rank & Stock to Consider
Vertex currently carries a Zacks Rank #3 (Hold).A better-ranked stock in the overall healthcare sector is Ligand Pharmaceuticals (LGND - Free Report) , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, estimates for Ligand Pharmaceuticals’ 2023 EPS have increased from $3.30 to $4.16. During the same period, the earnings estimates per share for 2024 have risen from $3.10 to $4.58. Shares of Ligand Pharmaceuticals have gained 14.9% in the year-to-date period.
Earnings of Ligand beat estimates in one of the last four quarters, while missing the mark on the other three occasions. On average, the company’s earnings witnessed a negative surprise of 10.07%. In the last reported quarter, Ligand’s earnings beat estimates by 10.57%.