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Vertex Pharmaceuticals Incorporated (VRTX - Free Report) reported first-quarter 2024 adjusted earnings per share of $4.76, which beat the Zacks Consensus Estimate of $4.10. Earnings increased 56% year over year, driven by higher product revenues, lower costs and a lower tax rate in the quarter.
The company reported total revenues of $2.69 billion, comprising cystic fibrosis (CF) product revenues. The figure beat the Zacks Consensus Estimate of $2.56 billion. Total revenues rose 13% year over year, primarily driven by higher sales of Trikafta/Kaftrio (marketed as Kaftrio in Europe) in U.S. and ex-U.S. markets.
Quarter in Detail
The company currently markets four CF products — Trikafta/Kaftrio, Symdeko (marketed as Symkevi in Europe), Orkambi and Kalydeco.
CF product sales rose 8% year over year in the United States to $1.52 billion, while sales outside the United States increased 21% to $1.17 billion.
Trikafta generated sales worth $2.48 billion, up 18.5% year over year. Trikafta sales beat the Zacks Consensus Estimate and our model estimate of $2.41 billion and $2.33 billion, respectively.
The upside was driven by the continued robust performance of Trikafta in and outside the United States, fueled by label expansions to younger age groups. However, a benefit from channel inventory phasing boosted sales in ex-U.S. markets, which is expected to reverse in subsequent quarters.
Sales from other CF products declined 25.5% year over year to $207.0 million. Sales of these drugs were hurt by patients switching to Trikafta.
Shares of Vertex have declined 1.1% so far this year compared with the industry’s decline of 5.8%.
Image Source: Zacks Investment Research
While CF remains the main area of focus, Vertex saw rapid success in its non-CF pipeline candidates’ development in 2023. Vertex and partner CRISPR Therapeutics’ (CRSP - Free Report) one-shot gene therapy, Casgevy, was approved for two blood disorders, sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT), in the United Kingdom, the United States, the European Union and some other countries in 2023/early 2024. These approvals have diversified its commercial opportunity.
Vertex did not announce any sales figures for Casgevy, as the company will recognize revenues for Casgevy near the end of the patient journey at infusion. It expects to record Casgevy sales from the second half of 2024.
Vertex now has more than 25 activated authorized treatment centers or ATCs in all regions where the therapy is approved. Vertex said it is also making great progress with payers and is looking to provide rapid and equitable access to Casgevy.
Costs Rise
Adjusted operating expense was $1.02 billion in the quarter, down 15.7% year over year.
Adjusted R&D expenses rose 1% year over year to $669.7 million. Adjusted selling, general and administrative (SG&A) expenses increased 38.1% to $272.0 million in the reported quarter.
During the reported quarter, Vertex recorded acquired in-process research and development (IPR&D) costs of $76.8 million compared with $347.1 million in the year-ago quarter.
Adjusted operating income was $1.34 billion in the quarter, up 48% from the prior-year period.
2024 Guidance
Vertex maintained its previously issued financial guidance for 2024. The company expects total product sales in the range of $10.55-$10.75 billion for 2024. The revenue range indicates growth of 8% at the midpoint. The revenue guidance includes sales from Casgevy from the second half of the year in approved indications and geographies.
Combined adjusted R&D, acquired IPR&D and SG&A expenses for 2024 are expected in the band of $4.3-$4.4 billion.
The adjusted tax rate is expected to be in the range of 20-21%.
Pipeline & Other Update
Vertex filed regulatory applications for vanza triple, a once-a-day oral combination medicine, for treating people with CF aged six years and older in the United States and EU. Vanza triple is a triple combination of vanzacaftor, deutivacaftor and tezacaftor. It has the potential for enhanced patient benefit than Trikafta and also offers the convenience of once-daily dosing and a substantially lower royalty burden.
Vertex is also developing treatments for acute and neuropathic pain, APOL1-mediated kidney disease (“AMKD”), type I diabetes and alpha-1 antitrypsin deficiency. It has earlier-stage programs in diseases such as muscular dystrophy.
Many of its non-CF candidates represent multibillion-dollar opportunities.
Investors are paying a lot of attention to pain asset suzetrigine (formerly known as VX-548), which, they believe, has blockbuster potential.
Around mid-April, the FDA allowed Vertex to begin a rolling new drug application (NDA) submission for suzetrigine across a broad label in moderate-to-severe acute pain. The company has already initiated the rolling submission process and is on track to complete the NDA submission the second quarter.
Vertex plans to initiate a pivotal phase III program of suzetrigine in diabetic peripheral neuropathy, a form of peripheral neuropathic pain caused by damage to nerves, in the second half of 2024. Vertex has also initiated a second phase II study of VX-548 in patients with painful lumbosacral radiculopathy, another form of peripheral neuropathic pain. Vertex believes suzetrigine has the potential to transform the treatment paradigm of pain, both acute and neuropathic
In April, Vertex initiated the phase III portion of the phase II/III AMPLITUDE study evaluating a once-daily oral dose of inaxaplin (VX-147) in AMKD, a genetic disorder affecting kidney function. The AMPLITUDE study is designed to assess the impact of inaxaplin on kidney function and proteinuria for people living with AMKD.
In April, Vertex announced a $4.9 billion definitive agreement to acquire Alpine Immune Sciences . The acquisition will add Alpine’s lead pipeline candidate, povetacicept, to Vertex’s pipeline. Povetacicept is designed to target two proteins, namely BAFF and APRIL, which are jointly responsible for the cause of multiple serious autoimmune diseases. This drug is set to enter into late-stage development for the treatment of IgA nephropathy in the second half of 2024.
Vertex believes povetacicept holds a “pipeline in a product” potential in a number of other serious autoimmune renal diseases and cytopenias in phase II development.
Our Take
Vertex’s first-quarter results were strong as it beat estimates for both earnings and sales. Vertex is benefitting from strong revenue growth, regulatory approvals and commercial launches. It has additional near-term launches planned, is rapidly progressing its mid- and earlier-stage pipeline and has clinical studies ongoing in 10 disease areas. The pending Alpine acquisition looks like a strategic fit for Vertex’s pipeline.
Zacks Rank & Stock to Consider
Vertex currently carries a Zacks Rank #3 (Hold).
Vertex Pharmaceuticals Incorporated Price and Consensus
In the past 60 days, the Zacks Consensus Estimate for Ligand Pharmaceuticals has improved from $4.42 per share to $4.56 per share. For 2025, earnings estimates have improved from $5.11 per share to $5.27 per share in the past 60 days. In the past year, shares of LGND have risen 2.0%
Earnings of Ligand Pharmaceuticals beat estimates in each of the last four quarters. LGND delivered a four-quarter average earnings surprise of 84.81%.
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Vertex's (VRTX) Q1 Earnings Beat, Trikafta Drives Sales
Vertex Pharmaceuticals Incorporated (VRTX - Free Report) reported first-quarter 2024 adjusted earnings per share of $4.76, which beat the Zacks Consensus Estimate of $4.10. Earnings increased 56% year over year, driven by higher product revenues, lower costs and a lower tax rate in the quarter.
The company reported total revenues of $2.69 billion, comprising cystic fibrosis (CF) product revenues. The figure beat the Zacks Consensus Estimate of $2.56 billion. Total revenues rose 13% year over year, primarily driven by higher sales of Trikafta/Kaftrio (marketed as Kaftrio in Europe) in U.S. and ex-U.S. markets.
Quarter in Detail
The company currently markets four CF products — Trikafta/Kaftrio, Symdeko (marketed as Symkevi in Europe), Orkambi and Kalydeco.
CF product sales rose 8% year over year in the United States to $1.52 billion, while sales outside the United States increased 21% to $1.17 billion.
Trikafta generated sales worth $2.48 billion, up 18.5% year over year. Trikafta sales beat the Zacks Consensus Estimate and our model estimate of $2.41 billion and $2.33 billion, respectively.
The upside was driven by the continued robust performance of Trikafta in and outside the United States, fueled by label expansions to younger age groups. However, a benefit from channel inventory phasing boosted sales in ex-U.S. markets, which is expected to reverse in subsequent quarters.
Sales from other CF products declined 25.5% year over year to $207.0 million. Sales of these drugs were hurt by patients switching to Trikafta.
Shares of Vertex have declined 1.1% so far this year compared with the industry’s decline of 5.8%.
Image Source: Zacks Investment Research
While CF remains the main area of focus, Vertex saw rapid success in its non-CF pipeline candidates’ development in 2023. Vertex and partner CRISPR Therapeutics’ (CRSP - Free Report) one-shot gene therapy, Casgevy, was approved for two blood disorders, sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT), in the United Kingdom, the United States, the European Union and some other countries in 2023/early 2024. These approvals have diversified its commercial opportunity.
Vertex did not announce any sales figures for Casgevy, as the company will recognize revenues for Casgevy near the end of the patient journey at infusion. It expects to record Casgevy sales from the second half of 2024.
Vertex now has more than 25 activated authorized treatment centers or ATCs in all regions where the therapy is approved. Vertex said it is also making great progress with payers and is looking to provide rapid and equitable access to Casgevy.
Costs Rise
Adjusted operating expense was $1.02 billion in the quarter, down 15.7% year over year.
Adjusted R&D expenses rose 1% year over year to $669.7 million. Adjusted selling, general and administrative (SG&A) expenses increased 38.1% to $272.0 million in the reported quarter.
During the reported quarter, Vertex recorded acquired in-process research and development (IPR&D) costs of $76.8 million compared with $347.1 million in the year-ago quarter.
Adjusted operating income was $1.34 billion in the quarter, up 48% from the prior-year period.
2024 Guidance
Vertex maintained its previously issued financial guidance for 2024. The company expects total product sales in the range of $10.55-$10.75 billion for 2024. The revenue range indicates growth of 8% at the midpoint. The revenue guidance includes sales from Casgevy from the second half of the year in approved indications and geographies.
Combined adjusted R&D, acquired IPR&D and SG&A expenses for 2024 are expected in the band of $4.3-$4.4 billion.
The adjusted tax rate is expected to be in the range of 20-21%.
Pipeline & Other Update
Vertex filed regulatory applications for vanza triple, a once-a-day oral combination medicine, for treating people with CF aged six years and older in the United States and EU. Vanza triple is a triple combination of vanzacaftor, deutivacaftor and tezacaftor. It has the potential for enhanced patient benefit than Trikafta and also offers the convenience of once-daily dosing and a substantially lower royalty burden.
Vertex is also developing treatments for acute and neuropathic pain, APOL1-mediated kidney disease (“AMKD”), type I diabetes and alpha-1 antitrypsin deficiency. It has earlier-stage programs in diseases such as muscular dystrophy.
Many of its non-CF candidates represent multibillion-dollar opportunities.
Investors are paying a lot of attention to pain asset suzetrigine (formerly known as VX-548), which, they believe, has blockbuster potential.
Around mid-April, the FDA allowed Vertex to begin a rolling new drug application (NDA) submission for suzetrigine across a broad label in moderate-to-severe acute pain. The company has already initiated the rolling submission process and is on track to complete the NDA submission the second quarter.
Vertex plans to initiate a pivotal phase III program of suzetrigine in diabetic peripheral neuropathy, a form of peripheral neuropathic pain caused by damage to nerves, in the second half of 2024. Vertex has also initiated a second phase II study of VX-548 in patients with painful lumbosacral radiculopathy, another form of peripheral neuropathic pain. Vertex believes suzetrigine has the potential to transform the treatment paradigm of pain, both acute and neuropathic
In April, Vertex initiated the phase III portion of the phase II/III AMPLITUDE study evaluating a once-daily oral dose of inaxaplin (VX-147) in AMKD, a genetic disorder affecting kidney function. The AMPLITUDE study is designed to assess the impact of inaxaplin on kidney function and proteinuria for people living with AMKD.
In April, Vertex announced a $4.9 billion definitive agreement to acquire Alpine Immune Sciences . The acquisition will add Alpine’s lead pipeline candidate, povetacicept, to Vertex’s pipeline. Povetacicept is designed to target two proteins, namely BAFF and APRIL, which are jointly responsible for the cause of multiple serious autoimmune diseases. This drug is set to enter into late-stage development for the treatment of IgA nephropathy in the second half of 2024.
Vertex believes povetacicept holds a “pipeline in a product” potential in a number of other serious autoimmune renal diseases and cytopenias in phase II development.
Our Take
Vertex’s first-quarter results were strong as it beat estimates for both earnings and sales. Vertex is benefitting from strong revenue growth, regulatory approvals and commercial launches. It has additional near-term launches planned, is rapidly progressing its mid- and earlier-stage pipeline and has clinical studies ongoing in 10 disease areas. The pending Alpine acquisition looks like a strategic fit for Vertex’s pipeline.
Zacks Rank & Stock to Consider
Vertex currently carries a Zacks Rank #3 (Hold).
Vertex Pharmaceuticals Incorporated Price and Consensus
Vertex Pharmaceuticals Incorporated price-consensus-chart | Vertex Pharmaceuticals Incorporated Quote
A top-ranked stock in the healthcare sector is Ligand Pharmaceuticals (LGND - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the Zacks Consensus Estimate for Ligand Pharmaceuticals has improved from $4.42 per share to $4.56 per share. For 2025, earnings estimates have improved from $5.11 per share to $5.27 per share in the past 60 days. In the past year, shares of LGND have risen 2.0%
Earnings of Ligand Pharmaceuticals beat estimates in each of the last four quarters. LGND delivered a four-quarter average earnings surprise of 84.81%.