Vertex shattered Wall Street expectations on Wednesday with an earnings report that showed the Boston-based drug company recorded a little over $1.5 billion in sales across the first three months of the year.
These fresh sales are 77% higher than what Vertex saw during last year's first quarter. They're also roughly $200 million more than what analysts, who usually model a strong performance from Vertex, had predicted. Along with better-than-expected results, the company raised its full-year revenue estimates by about $250 million, to fall within the range of $5.3 billion to $5.6 billion.
The source of that financial success is Vertex's newest cystic fibrosis drug, Trikafta, which received approval in the U.S. in late October and then in Europe a couple weeks later. While Vertex's cystic fibrosis franchise has long held a dominant position, the addition of Trikafta now lets the company treat around 90% of the patient population — a fact that has resulted in quick, massive sales.
After just 10 weeks on the market, Trikafta had fetched $420 million in revenue for Vertex. That makes it not only the company's best drug launch, but also the second biggest launch — following Gilead's hepatitis C medicine Harvoni — for any drug over the past five years. Trikafta's sales trajectory continued upward in the first quarter to reach $895 million, a figure almost 90% higher than the average analyst estimate of $474 million.
That growth came, in part, at the expense of Vertex's other cystic fibrosis products, as many patients switched off of them and onto Trikafta. Sales for Vertex's Kalydeco, Orkambi and Symdeko were down 13%, 20% and 46%, respectively, between the first quarters of 2019 and 2020. Still, at least half of the growth came from new patients who weren't already taking a Vertex drug.
Though Vertex's bottom line is benefiting from Trikafta, company executives acknowledged on an earnings call Wednesday that the drug's rapid uptake will make further growth harder to achieve.
They noted how the majority of the 18,000 U.S. patients eligible to take Trikafta are already doing so. And while the company is on track with plans to expand the drug's use into younger patients, it's already begun to see the growth curve flatten and the pace of patients beginning treatment slow down.
Stuart Arbuckle, Vertex's chief commercial officer, said patients staying compliant with their treatment will be the "biggest single factor" for determining Trikafta's performance moving forward.
"When patients first initiate on a medicine, their persistence and compliance rates are essentially at 100%, and that number only goes down from there over subsequent quarters until it levels out at more of a steady state," said Charlie Wagner, Vertex's chief financial officer. "So those will have an increasing impact over the balance of the second half of the year, and is part of what we considered as we put the guidance together."
Vertex also expects COVID-19, which has already caused clinical trial enrollment issues for several of the company's experimental medicines, to have some level of impact on sales. Arbuckle said he doesn't expect the pandemic to have a "substantial impact" on patients staying compliant with Trikafta, but it could affect new patients starting treatment since cystic fibrosis centers are limiting non-emergency interactions.
Despite those concerns, Vertex's earnings combined with its revised revenue guidance stirred up investor optimism. Shares were up almost 3% Thursday morning, to trade at about $258 apiece. Vertex's share price has risen 44% over the last year, putting the company's market cap in the $65 billion range.
"This further supports the thesis that [Vertex] should execute well despite a COVID environment," Jefferies analyst Michael Yee wrote in a note to clients.