Five Things to Take Away From Vertex's Q1

May 1, 2015
By Alex Keown, BioSpace.com Breaking News Staff

BOSTON – All eyes will be watching Vertex Pharmaceuticals ’ newest cystic fibrosis drug Orkambi to see if it outperforms the drugmaker’s current cystic fibrosis medication Kalydeco, which earned $130 million in the first quarter.

Since its approval by federal regulators three years ago, Kalydeco has steadily improved its earnings year after year. But while Kalydeco has been a steady performer for Vertex, analysts are carefully watching the launch of the Orkambi, which is expected to launch this summer and earn $5 billion by 2018, the Boston Business Journal reported Thursday.

The Business Journal noted there are five things to take away from the company’s report:

1. Orkambi is the new name of its combination of Kalydeco and lumacaftor, which will be used to treat patients with the with the F508del mutation of cystic fibrosis, a mutation the lead drug cannot treat on its own.

2. First though, Orkambi has to receive final approval by the U.S. Food and Drug Administration (FDA), which is expected to happen next month. Orkambi is predicted to have a wider reach than Kalydeco. The company expects 3,900 patients to be eligible to take Kalydeco by the end of the year, but Orkambi will “be able to treat 20,500 cystic fibrosis patients in the EU and U.S. older than 12 with the F508del mutation,” the Motley Fool reported. If Orkambi is approved for younger patients, that number could swell by another 5,000.

3. Kalydeco is expected to continue to be a strong earner for the company. The company reported it expects Kalydeco to earn $560 million to $580 million this year, up from the $464 million for 2014. The company said foreign markets, particularly Australia, could be positive areas for sales this year.

4. The company is continuing to develop other cystic fibrosis drugs for its pipeline, including VX-661. Last month the company reported the benefits to lung function in the 39-patient trial seemed to decline slightly over time, although Leiden said there “was no statistical or consistent downward trend,” the Boston Business Journal reported.

5. Orkambi is expected to have a slower reach than Kalydeco. In a call with media this week Leiden said Orkambi’s launch will likely not be as accelerated as the Kalydeco launch. “The Kalydeco uptake was virtually vertical. I mean, we were at 90 percent of peak penetration in six months, the fastest launch personally I’ve ever been involved in. And so whilst we’re saying the relative rate of uptake with Orkambi maybe slightly slower ... we’re still expecting the demand to be very significant from both patients and physicians, the Boston Business Journal quoted Leiden as saying.

Earlier this year Kalydeco, the first drug designed to counter the genetic cause of cystic fibrosis, was touted by the White House during the State of the Union Address. During his talk to the nation, President Barack Obama pointed out a guest of the first lady who is taking Kalydeco. Kalydeco was approved in 2012 and is aimed at a “select few” of the genetic mutations that can cause cystic fibrosis.

Additionally the administration has pointed to the drug being an example of the kinds of medication that will allow researchers to examine the cause of cancers and other illnesses on a genetic level in order to provide targeted therapies for individual care. Delving into disease at a genetic level will give researchers more confidence in developing those new medications, Jeffrey Leiden, Vertex’s chief executive officer said in news reports.

While the solid earnings from Kalydeco and expected earnings from Orkambi are promising, Vertex Pharmaceuticals earnings for the first quarter still fell short of analysts expectations. Zacks questioned the company’s reliance on cystic fibrosis medications for revenue growth.

Vertex stock closed Thursday at $123.28 per share, down from a daily high of $128.69.