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Vertex (VRTX) Beats on Q4 Earnings & Sales, '23 View Encouraging

Vertex Pharmaceuticals Incorporated VRTX reported adjusted earnings per share of $3.76 in fourth-quarter 2022, up 25% year over year. The adjusted earnings also beat the Zacks Consensus Estimate and our model estimate of $3.53 and $3.32, respectively. Strong cystic fibrosis (“CF”) product revenues during the quarter, partially offset by higher research and development expenses, boosted earnings.

The company reported total revenues of $2.30 billion, comprised fully of CF product revenues. This figure surpassed both the Zacks Consensus Estimate and our model estimates of $2.29 billion and $2.26 billion, respectively. Total revenues rose 11% year over year, primarily driven by higher international sales of Trikafta (marketed as Kaftrio in Europe).

In the past year, shares of Vertex have risen 28.1% against the industry’s 9.4% fall.

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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 24% to $842 million.

Trikafta generated sales worth $2.02 billion, up 19.4% 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 our model estimate of $1.99 billion.

Symdeko/Symkevi registered sales of $34 million in the quarter, down 57.5% year over year.

Kalydeco recorded sales of $136 million in the quarter, down 10.5% year over year. Orkambi generated sales of $111 million in the reported quarter, down 24.5% from the prior-year quarter’s levels. Sales of Kalydeco, Symdeko/ Symkevi and Orkambi were hurt by patients switching to Trikafta.

Full-Year Results

For 2022, Vertex generated revenues of $8.9 billion, reflecting 18% growth year over year.

For the same period, the company reported earnings of $14.88 per share, up 54% year over year.

Costs Rise

Adjusted operating expense was $872 million in the quarter, up 5% from the prior-year quarter’s levels. This rise in expenses was caused by the company to support the clinical development of its pipeline candidates and increased costs incurred by management to support the company’s product launches across the globe.

Adjusted research and development (R&D) expenses rose 26.4% from the year-ago quarter’s levels to $623 million due to the expanding the company’s mid- and late-stage pipeline.

Adjusted selling, general and administrative (SG&A) expenses increased 7.6% to $226 million in the reported quarter due to expenses for CF launches and pre-commercial activities for exa-cel.

During the fourth quarter, Vertex recorded acquired IPR&D costs of $23 million compared with $127 million in the year-ago quarter.

2023 Guidance

The company expects total revenues from CF products in the range of $9.55-$9.70 billion for 2023, suggesting a 7-9% year-over-year growth.

For the full year, management expects to record adjusted operating expenses in the band of $3.9-$4.0 billion. The adjusted tax rate is expected in the range of 21-22%.

Pipeline & Other Updates

Vertex announced that it has filed for label expansions in the U.S. and Europe for using Trikafta/Kaftrio in children aged two to five years. A final decision from the FDA is expected before April 2023-end.

Last December, the FDA accepted the company’s IND applicationseeking to start clinical studies on VX-522, an investigational mRNA-based therapy for cystic fibrosis (CF) indication. With this therapy, management intends to target a patient populationwho still cannot benefit from its four marketed CF medicines. This study is expected to begin in early 2023.

VX-522 is being developed in collaboration with Moderna MRNA. Vertex and Moderna entered into a collaboration in 2016 to discover and develop mRNA therapeutics for CF. Per the terms of collaboration, Vertex is responsible for leading the preclinical and clinical development of therapies under this collaboration. Moderna is responsible for mRNA and lipid nanoparticle (LNP) process development and manufacturing. Moderna is also eligible to receive milestone payments and royalties on sales of potential products resulting from this collaboration.

Apart from CF, Vertex is rapidly advancing its pipeline consisting of rapidly advancing mid- and late-stage candidates across seven 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, in partnership with CRISPR Therapeutics CRSP in two devastating diseases — transfusion-dependent beta thalassemia (TDT) and sickle cell disease (SCD). Vertex and CRISPR Therapeutics started a rolling review submission with the FDA for exa-cel in SCD and TDT indications last November, which is expected to be completed by first-quarter 2023. Vertex and CRISPR Therapeutics have also filed similar submissions on exa-cel in Europe, which were validated in fourth-quarter 2022. VRTX expects the CRSP-partnered candidate to be its next commercial launch.

Vertex continues to enroll study participants in the ongoing 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. This study is expected to be completed by 2023-end or early 2024. During fourth-quarter 2022, management initiated a phase II dose-ranging study on VX-548 in neuropathic pain.

Vertex Pharmaceuticals Incorporated Price


Vertex Pharmaceuticals Incorporated Price
Vertex Pharmaceuticals Incorporated Price

Vertex Pharmaceuticals Incorporated price | Vertex Pharmaceuticals Incorporated Quote


Zacks Rank & Stock to Consider

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

A better-ranked stock in the same sector is Arcus Biosciences RCUS, which sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arcus Biosciences loss per share estimates for 2023 have narrowed from $4.75 to $4.57 in the past 30 days. RCUS’s stock has declined 29.6% in the past year.

Earnings of Arcus Biosciences beat estimates in two of the last four quarters, missed the mark on one occasion and met the mark on another. On average, RCUS witnessed a trailing four-quarter positive earnings surprise of 56.74%, on average. In the last reported quarter, Arcus Biosciences’ earnings beat estimates by 14.29%.

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