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Vertex Inks Reimbursement Agreement for Orkambi in Australia

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Vertex Pharmaceuticals Inc. (VRTX - Free Report) announced that an agreement has been finalized with the Australian Government, which will allow reimbursement on cystic fibrosis (“CF”) drug, Orkambi (lumacaftor + ivacaftor) in the country. This follows the positive recommendation from Pharmaceutical Benefits Advisory Committee (“PBAC”) last month. Per the agreement, the drug will be listed on the Pharmaceutical Benefits Scheme (“PBS”) starting Oct 1, 2018.

Orkambi is approved for treating CF patients aged six years and above with two copies of the F508del mutation in the cystic fibrosis transmembrane conductance regulator (CFTR) gene in the country. We remind investors that this is the most common form of mutation in CF patients. There are approximately 1,300 patients in Australia who are eligible for treatment with Orkambi. The drug may see faster acceptance as it will improve the access to the drug, which in turn will drive sales.

Vertex is pursuing similar agreements in several European countries, following the first approval of the drug in the European Union in 2015. The company has successfully signed agreements in some countries including Germany, Ireland, Sweden and Italy. However, it is also facing resistance in some countries including the United Kingdom and France due to its high listing price, which has resulted in limited revenues from these countries.

The stock has gained 23% so far this year against the 1.7% decrease registered by the industry.

Orkambi is the major product revenue generator for Vertex, bringing in $665.3 million in sales in the first half of 2018. The company has two other CF drugs — Kalydeco (ivacaftor) and Symdeko — in its portfolio. We remind investors that, Symdeko is a combination of tezacaftor and ivacaftor, which was launched in the United States in February for treating CF patients. The drug has shown strong uptake so far and is under review in Europe.

The company has strong prospects as all the three drugs are performing well. According to the company, about 34,000 people worldwide are eligible for treatment with Vertex’s CF medicines and it expects to consistently expand the number of eligible patients in 2018.

Vertex also has a strong CF pipeline which includes triple combination treatments for CF, which are expected to treat almost 90% of the global CF patients, if approved.

Meanwhile, in late June, Galapagos NV’s (GLPG - Free Report) lower-than-expected top-line results in a phase II study on its CF candidate, GLPG2737, turned out to be a positive for Vertex. Moreover, Galapagos’ collaboration partner, AbbVie (ABBV - Free Report) opted out of the development of a triple combination regimen for CF patients. Corbus Pharmaceuticals Holdings, Inc. (CRBP - Free Report) is developing a CF candidate, lenabasum, in a mid-stage study.

Zacks Rank

Vertex currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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