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Vertex (VRTX) Beats on Q3 Earnings, Ups 2022 Sales Guidance

Vertex Pharmaceuticals Incorporated VRTX reported adjusted earnings per share of $4.01 in third-quarter 2022, up 14% year over year. The adjusted earnings also beat the Zacks Consensus Estimate of $3.69. Strong cystic fibrosis (“CF”) product revenues during the quarter, which was partially offset by higher research and development expenses, boosted earnings.

Revenues of $2.33 billion, which surpassed the Zacks Consensus Estimate of $2.23 billion, comprised fully of CF product revenues. Total product revenues rose 18% 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 5% year over year in the United States to $1.46 billion, while sales outside the United States surged 46% to $879 million.

Trikafta generated sales worth $2.01 billion, up 29.2% year over year, driven by strong uptakes 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 also beat the Zacks Consensus Estimate of $1.93 billion.

Symdeko/Symkevi registered sales of $38 million in the quarter, down 53.1% year over year.

Kalydeco recorded sales of $139 million in the quarter, down 14.2% year over year. Orkambi generated sales of $146 million in the reported quarter, down 21.1% from the prior-year quarter’s levels. Sales of Kalydeco, Symdeko/ Symkevi and Orkambi were hurt by patients switching to Trikafta.

Costs Rise

Adjusted operating expense was $758 million in the quarter, up 29% from the prior-year quarter’s levels. This rise in the expense was made by the company to support the clinical development of its pipeline candidates as well as increased costs incurred by management to support the company’s product launches.

Adjusted research and development (R&D) expenses rose 36.2% from the year-ago quarter’s levels to $549 million due to the expanding mid- and late-stage pipeline.

Adjusted selling, general and administrative (SG&A) expenses increased 13.9% to $180 million in the reported quarter due to expenses for CF launches and pre-commercial activities for exa-cel.

During the third quarter, Vertex recorded acquired IPR&D costs of $29 million compared with $27 million in the year-ago quarter.

Ups 2022 Guidance

The company raised its previously-issued product sales guidance for 2022 from $8.6-$8.8 billion to $8.8-$8.9 billion, backed by robust sales of Kaftrio/Trikafta in international markets and a steady performance in the United States. The updated guidance represents product revenue growth of approximately 17% at the midpoint. Shares rose 4.8% in after-market trading on Oct 27, most likely on this increased sales guidance.

This year so far, shares of Vertex have surged 31.1% against the industry’s 23.3% decline.

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Combined adjusted R&D, Acquired IPR&D and SG&A expense guidance for 2022 was maintained in the range of $3.0-$3.1 billion. The adjusted tax rate is expected in the range of 21-22%.

Pipeline & Other Updates

Though Vertex is a market leader in the CF space, the company is rapidly advancing its pipeline consisting of rapidly advancing mid- and late-stage clinical non-CF pipelines across six disease areas. 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 (formerly CTX001), in partnership with CRISPR Therapeutics CRSP in two devastating diseases — in transfusion-dependent beta thalassemia (TDT) and sickle cell disease (SCD). CRISPR Therapeutics and Vertex are evaluating exa-cel in two ongoing phase I/II/III studies in SCD and TDT indications.

Vertex and CRISPR Therapeutics are also preparing to start a rolling review submission with the FDA for exa-cel in the indications by November 2022. Vertex and CRISPR Therapeutics have already completed discussions on exa-cel for both SCD and TDT indications with the regulatory authorities in Europe. The companies intend to submit the regulatory filings by this year’s end. Vertex expects exa-cel to be its next commercial launch.

Alongside its earnings release, Vertex also announced initiated the 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. A phase II dose-ranging study of VX-548 in neuropathic pain is expected to be initiated by the end of this year.

Inaxaplin (formerly VX-147) is being developed in a single pivotal phase II/III study in patients with APOL1-mediated kidney disease, or AMKD with two APOL1 mutations and proteinuric kidney disease. Enrollment is ongoing, with more than 30 sites active in the United States.

Vertex says that exa-cel, inaxaplin and VX-548 all represent multibillion-dollar opportunities.

The company also completed the acquisition of ViaCyte last month. Prior to the acquisition, Vertex partnered with ViaCyte to develop VX-880, an investigational stem cell-derived fully differentiated islet cell replacement therapy to treat type I diabetes (T1D) with impaired hypoglycemic awareness and severe hypoglycemia.

VRTX has also initiated a first-in-human clinical study on VX-634, a small molecule AAT corrector in healthy volunteers. Vertex will also begin a 48-week phase II study of VX-864, its first-generation AAT corrector, in a few weeks to evaluate if longer-term treatment with VX-864 can result in polymer clearance from the liver and lead to greater increases in functional AAT levels in the plasma. Management had previously evaluated VX-864 in a phase II study which failed to address the candidate’s effects on the levels of liver polymer, an important clinical endpoint.

Vertex Pharmaceuticals Incorporated Price


Vertex Pharmaceuticals Incorporated Price
Vertex Pharmaceuticals Incorporated Price

Vertex Pharmaceuticals Incorporated price | Vertex Pharmaceuticals Incorporated Quote


Zacks Rank & Stocks to Consider

Vertex currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the overall healthcare sector include Codiak BioSciences CDAK and Morphic MORF, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, estimates for Codiak BioSciences’ 2022 loss per share have narrowed from $1.94 to $1.81. During the same period, the loss estimates per share for 2023 have narrowed from $2.14 to $1.53. Shares of Codiak BioSciences have lost 93.8% in the year-to-date period.

Earnings of Codiak BioSciences beat estimates in three of the last four quarters and missed the mark just once, witnessing a surprise of 35.40% on average. In the last reported quarter, CDAK delivered an earnings surprise of 61.54%.

In the past 60 days, estimates for Morphic’s 2023 loss per share have narrowed from $3.77 to $3.61 during the same period. Shares of Morphic have lost 42.7% in the year-to-date period.

Earnings of Morphic beat estimates in three of the last four quarters and missed the mark just once, witnessing a surprise of 48.29%, on average. In the last reported quarter, MORF delivered an earnings surprise of 183.95%.

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