Vertex (VRTX) Q3 Earnings and Revenues Surpass Estimates

Vertex Pharmaceuticals IncorporatedVRTX announced third-quarter 2018 earnings per share of $1.09, which beat the Zacks Consensus Estimate of $1. Moreover, the figure came ahead of the year-ago bottom line of 53 cents. Strong cystic fibrosis (CF) product revenues led to higher profits in the reported quarter.

Vertex reported revenues of $784.5 million in the third quarter, surpassing the Zacks Consensus Estimate of $783 million. Sales surged 35.7% year over year, driven by higher sales of its CF products.

Shares of Vertex have increased 8.8% so far this year against the industry's decrease of 15.8%.

CF Drugs Sales Remain Strong

Vertex's third-quarter revenues consisted of high sales from its CF products such as Kalydeco (ivacaftor), Orkambi (lumacaftor-ivacaftor) and Symdeko, collaborative revenues of $0.7 million and royalty revenues of $1.2 million.

Total CF product revenues were $783 million in the third quarter, up 42% year over year, mainly driven by the rapid uptake and strong demand for its newest CF medicine, Symdeko, launched in the United States in February. Kalydeco sales also rose in the quarter while Orkambi sales declined. However, Kalydeco sales weakened sequentially in the quarter.

Symdeko, a combination of tezacaftor (VX-661) and ivacaftor (Kalydeco), contributed $255 million to the top line. The drug is approved in the United States and Canada and has seen increasing demand since its launch. Symdeko is under review in the EU for a similar indication and is expected to be approved during the fourth quarter of 2018. If granted a nod, the drug will be marketed by the trade name of Symkevi in EU.

Kalydeco sales improved 15.5% to $246 million, driven by continued label expansions with increase in patient population. In August 2018, Vertex gained an FDA approval to expand the use of Kalydeco in children, aged 12 months to two years of age. The company received a positive opinion from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) in the same age group and a decision is awaited by 2018 end in the EU.

In October, Vertex announced encouraging data on Kalydeco from phase III study on infants under 12 months of age. The company plans to submit a supplemental new drug application (sNDA) to the FDA and a line extension to the EMA by this year-end.

Orkambi sales softened 16.1% year over year to $282 million due to a switch in patient base to Symdeko from Orkambi and patients discontinuing Orkambi to start treatment with Symdeko. However, in August 2018, Orkambi was approved by the FDA to treat CF in children aged two-five years. A similar application is filed in the EU with a decision estimated during the first half of 2019. Meanwhile, Vertex initiated dosing in a phase III evaluation of Orkambi on children with CF aged 12 months to two years.

Costs Rise

Adjusted research and development (R&D) expenses escalated 12.8% to $274 million in the third quarter, primarily due to the advancement of the company's portfolio of triple combination regimens for CF.

Adjusted selling, general and administrative (SG&A) expenses mounted 15.4% to $105 million in the quarter under review due to investments made in supporting the treatment of CF patients, globally.

2018 Revenue Guidance

Vertex maintained its revenue view for 2018. The company expects CF revenues to be in the range of $2.9-$3 billion during 2018.

The guidance for combined adjusted research and development (R&D) plus selling, general and administrative (SG&A) expenses in 2018 was also maintained in the band of $1.50-$1.55 billion.

Pipeline & Regulatory Updates

Vertex is assessing a couple of next-generation CFTR correctors (VX-659 and VX-445) in phase III studies as part of a triple combination with tezacaftor and ivacaftor. Vertex is evaluating both combinations in two separate programs for F508del/Min and F508del homozygous patients.

Enrollment in the VX-659 phase III analyses were completed in third-quarter 2018 with top-line data expected in the fourth quarter. Enrollment in the VX-445 phase III programs is estimated to be wrapped up during the fourth quarter with top-line data likely to be presented in the first quarter of 2019. A regulatory submission for either of the two regimes is planned for mid-2019.

If the triple-combo therapies are successful, Vertex can address a significantly larger CF patient population - almost 90% of patients with CF - in the future.

Earlier this month, together with CRISPR Therapeutics CRSP , Vertex announced that the FDA has lifted the clinical hold, which it had placed on the companies' investigational new drug (IND) application for CTX001 with regard to sickle cell disease (SCD). The companies also stated that the FDA has now accepted the IND application and the phase I/II study on CTX001 for SCD will begin by the end of 2018.

Meanwhile, Vertex and CRISPR are currently enrolling patients with transfusion dependent β-thalassemia in a phase I/II in β-thalassemia in Europe. The study will enroll (n=45) patients.

Vertex's non-CF pipeline candidates include VX-150 (phase II studies for addressing acute pain following bunionectomy surgery, pain from osteoarthritis of the knee and pain caused by small fiber neuropathy) and VX-210 (phase IIb study for certain acute cervical spinal cord injuries).

However, along with the earnings release, Vertex informed that it is discontinuing development of its pipeline candidate, VX-210, evaluated in a phase IIb study for certain acute cervical spinal cord injuries. Based on interim data from the study, its Data Safety Monitoring Board (DSMB) recommended to stop the evaluation early due to futility.

Vertex Pharmaceuticals Incorporated Price, Consensus and EPS Surprise

Vertex Pharmaceuticals Incorporated Price, Consensus and EPS Surprise | Vertex Pharmaceuticals Incorporated Quote

Vertex currently carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the biotech sector are Gilead Sciences, Inc. GILD and Genmab A/S GNMSF . Both companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Gilead Sciences' earnings estimates have been revised 0.8% upward for 2018 and 1.5% for 2019 over the past 60 days.

Genmab' earnings estimates have been moved 1.8% north for 2018 and 11.8% for 2019 over the past 60 days.

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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.

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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