- Vertex on Thursday put an exclamation mark to the earlier-than-expected U.S. approval of its new cystic fibrosis drug Trikafta, reporting fourth quarter revenues five times higher than what Wall Street had expected from the Massachusetts biotech.
- In the roughly nine weeks from Trikafta's Oct. 21 approval through the end of the year, Vertex recorded $420 million in revenue from the drug. While that figure was helped by $100 million in inventory stocking, it's easily the best launch of Vertex's four cystic fibrosis treatments and one of the strongest starts for a new drug in the past five years.
- With Trikafta, Vertex can treat 90% of all patients with cystic fibrosis, including some 6,000 in the U.S. who were previously not eligible for the company's other treatments.
Thursday's earnings call was Jeffrey Leiden's last as CEO of Vertex, a role he's held since late 2011. During his first full year on the job, the Boston-area biotech recorded a $107 million loss. Now, it gets to tout a $1.2 billion profit.
Wall Street has lauded that journey. Cantor Fitzgerald analyst Alethia Young called Leiden's stewardship of Vertex a "CEO mic drop," while Michael Yee of Jefferies said the top executive is leaving his company in a "great position."
Leiden's torch will be passed to Reshma Kewalramani, Vertex's head of global medicines development and medical affairs, on April 1. She'll take over at a time of unprecedented sales, now modeled between $5.1 billion and $5.3 billion in net product revenue for 2020.
Trikafta is expected to be a big part of the $1.2 billion net revenue increase Vertex expects to see this year. In less than 10 weeks on the market, the drug claimed the title of Vertex's top-selling medicine. The $100 million inventory build helped, but company leadership expects sales to remain strong even without that boost.
"Candidly, when you think about the $5.2 billion number at the midpoint — so a $1.2 billion increase year over year, a 30% growth rate — it sets us up for another very strong year," Leiden said.
Among the nearly two dozen drugs that had notable launches over the past five years, Trikafta posted the second strongest first quarter of sales. The only launch to edge it out is Gilead's hepatitis C treatment Harvoni, which earned $2.1 billion in its first quarter on the market. Vertex's Orkambi and Gilead's Epclusa also drove quick revenue, turning $131 million and $64 million, respectively, during their first quarters. (Launch timing versus the drug's first quarter's end complicates this comparison, however.)
A fast start for Trikafta will have an effect on Vertex's other medicines, however. Since Trikafta is approved for the same cystic fibrosis patients as Orkambi and Symdeko, Leiden expects the "vast majority" of those patients to switch onto the newer medicine.
"Exactly how long that process will take, it’s hard to tell. Obviously, we’re early in the launch. But in terms of the destination, the vast majority of those patients are going to transition to Trikafta," he said.
Jefferies guesses that $100 million of the $420 million in Trikafta revenue came via patients switching off Vertex's older drugs. Between the third and fourth quarter, Symdeko sales fell 18% to $332 million while Orkambi sales dropped 9% to $270 million. Overall, combined sales from Symdeko, Orkambi and Kalydeco were 12% lower in the last three months of the year.
None of Vertex's medicines come cheap. The biotech set Trikafta's list price at nearly $24,000 per 28-day pack, equaling an annual cost of over $311,000. Symdeko and Orkambi, two of the company's other drugs, cost nearly as much — a point of contention that led to a drawn-out dispute over reimbursement in the U.K.
The company recently secured insurance coverage for its medicines in England and Scotland. Those victories, according to Vertex's chief commercial officer, didn't affect revenue numbers too much in 2019, but the company expects revenue from the European market to ramp up in 2020.
Shares of Vertex were up almost 5% after market's close Thursday, but fell by about 2% in Friday morning trading.