JPM: Vertex stakes out cautious 2017 forecasts

Dive Brief:

  • Vertex Pharma on Sunday unveiled cautious sales guidance for its flagship cystic fibrosis drug Orkambi, predicting $1.1 billion to $1.3 billion in net product revenues for 2017.  
  • Slower-than-expected sales of Orkambi (lumacaftor/ivacaftor) had led Vertex to cut its revenue forecasts for 2016 last September, prompting questions about future growth for the critically important drug. 
  • Fourth quarter sales of Orkambi hit $276 million, slightly above consensus estimates. Extrapolated out over 2017, continued sales at that rate would see Vertex meeting the low end of its target range. 

Dive Insight:

Vertex sees two drivers for growth in Orkambi sales: completing reimbursement agreements in Europe and uptake among children aged 6 to 11 in the U.S. 

2016 Orkambi revenues, for example, don't include any revenues from France. About 1,000 of 1,500 eligible patients have begun treatment with the drug, and Vertex has collected roughly £70 million (or about $74 million) through early-access programs. That revenue won't be recognized until a formal reimbursement agreement in France is completed, Vertex said. 

According to Jefferies, an investment firm, France sales booked as revenue in 2017 could boost Orkambi towards the high-end of Vertex's forecast range. 

The aged 6-11 pediatric population is another source of potential growth. When Vertex cut its 2016 guidance last September, the company noted that it was approaching "peak penetration" of Orkambi in the 12 and older patient population. Approval for use in children aged 6-11 expands the eligible patient pool by about 2,500, according to company estimates. 

Vertex also plans to submit an application for approval in the 6-11 population in Europe sometime during the first half of the year. 

Revenues from sales of Kalydeco, Vertex's older cystic fibrosis drug, are expected to hit between $690 million and $710 million in 2017 — roughly flat from the $703 million seen in 2016. 

Vertex also said it plans to submit its experimental drug tezacaftor for U.S. approval in combination with ivacaftor during the second half of the year. 

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