On November 2, 2021 Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) reported consolidated financial results for the third quarter ended September 30, 2021 and raised full-year 2021 product revenue guidance to $7.4 to $7.5 billion (Press release, Vertex Pharmaceuticals, NOV 2, 2021, View Source [SID1234594105]).
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"Our financial performance in the third quarter was outstanding, marked by the exceptional continued growth of TRIKAFTA/KAFTRIO. Based on these results, we are again raising our 2021 product revenue guidance, and we see significant additional growth ahead as we continue to deliver this transformational medicine to more people with CF," said Reshma Kewalramani, M.D., Chief Executive Officer and President of Vertex. "During the last quarter, we also significantly expanded and advanced our pipeline. We announced unprecedented data from the first type 1 diabetes patient dosed with our stem cell-derived, allogeneic islet cells (VX-880). We completed enrollment in the Phase 2 proof-of-concept study of VX-147 in APOL1-mediated FSGS and will report results later this quarter. We also achieved target enrollment in both pivotal CTX001 studies to support our regulatory submissions next year. Finally, we made important advancements in our earlier stage pipeline and expect to submit INDs for both our CF mRNA program and type 1 diabetes cells and device program in 2022."
Product revenues increased 29% compared to the third quarter of 2020, primarily driven by the strong launches of KAFTRIO in Europe and performance of TRIKAFTA in the U.S., including the rapid uptake of TRIKAFTA to children 6-11 years old. Net product revenues in the third quarter of 2021 increased 13% to $1.38 billion in the U.S. and increased 92% to $601 million outside the U.S., compared to the third quarter of 2020.
GAAP and Non-GAAP net income increased compared to the third quarter of 2020, driven by strong product revenue growth.
Cash, cash equivalents and marketable securities were $7.0 billion, an increase of $0.3 billion compared to $6.7 billion as of December 31, 2020. The increase was primarily driven by strong operating cash flow partially offset by repurchases of our common stock authorized under our share repurchase programs and a $900 million payment in the second quarter of 2021 in connection with the amendment of Vertex’s collaboration with CRISPR Therapeutics.
Combined GAAP and Non-GAAP R&D and SG&A expenses increased compared to the third quarter of 2020, primarily due to the expansion of Vertex’s pipeline in cystic fibrosis and other disease areas and incremental investment to support the launches of Vertex’s medicines globally.
GAAP income taxes increased compared to the third quarter of 2020, primarily due to Vertex’s increased operating income and the impact of certain discrete tax events (Note 1).
Non-GAAP income taxes increased compared to the third quarter of 2020, primarily due to Vertex’s increased operating income.
Full-Year 2021 Financial Guidance
Vertex today increased its full-year 2021 product revenue guidance based on strong year-to-date performance. Vertex’s guidance is summarized below:
Key Business Highlights
Cystic Fibrosis (CF) Marketed Products
Vertex anticipates the number of CF patients treated with our medicines will continue to grow as we enter into additional reimbursement agreements, achieve new approvals for the treatment of younger patients, and expand treatment options for the approximately 10 percent of patients who do not benefit from cystic fibrosis transmembrane conductance regulator (CFTR) modulators, all of which will lead to continued growth of our CF business in the years ahead. Recent progress includes:
Vertex has signed a Letter of Intent (LOI) with the pan-Canadian Pharmaceutical Alliance (pCPA) regarding the public reimbursement of TRIKAFTA (elexacaftor/tezacaftor/ivacaftor and ivacaftor) for eligible patients with CF and has also reached multiple provincial agreements across Canada providing approximately 90% of Canadian patients 12 years of age and older and covered by government insurance with reimbursed access to TRIKAFTA.
Data are being presented at the North American CF Conference (NACFC) in November from the ongoing 192-week TRIKAFTA open-label extension study which show there has been no loss in mean lung function during long term follow-up at 96 weeks, a first for any CFTR modulator to date. Data from a retrospective study of KALYDECO (ivacaftor) will also be presented at the conference. The results showed that people with CF over approximately 6 years old had significantly lower rates of mortality, lung transplant and pulmonary exacerbations compared to those not on treatment.
Vertex’s application for approval of TRIKAFTA in children 6 through 11 years of age has been accepted for priority review by Health Canada.
TRIKAFTA/KAFTRIO is now approved and reimbursed or accessible in more than 20 countries outside the U.S., including Italy, France and Canada.
R&D pipeline
Vertex is delivering on a diversified pipeline of potentially transformative small molecule, cell and genetic therapies aimed at serious diseases. Recent and anticipated progress for key pipeline programs is noted below:
Cystic Fibrosis
The Phase 3 studies evaluating the new once-daily investigational triple combination of VX-121/tezacaftor/VX-561 (deutivacaftor) are underway.
In collaboration with Moderna, Vertex is evaluating CF mRNA therapeutics designed to treat the underlying cause of CF by enabling cells in the lungs to produce functional CFTR protein for the treatment of the 10% of patients who do not produce any CFTR protein. IND-enabling studies are underway and Vertex expects to submit an IND for this program in 2022.
Beta Thalassemia and Sickle Cell Disease (SCD)
The CTX001 program employs a non-viral ex vivo CRISPR gene-editing therapy for the treatment of transfusion-dependent thalassemia (TDT) and severe SCD.
Data presented to date support the profile of CTX001 as a one-time functional cure for patients with TDT and severe SCD, showing consistent and durable benefit across all treated patients.
Target enrollment has been achieved in the ongoing clinical trials in TDT and SCD to support the planned regulatory submissions in late 2022.
Type 1 Diabetes (T1D)
Vertex is evaluating cell therapies designed to replace insulin-producing islet cells that are destroyed in people with T1D with the goal of delivering a potential functional cure.
VX-880 is a stem cell-derived, allogeneic, fully differentiated, insulin-secreting islet cell replacement therapy, using standard immunosuppression to protect the implanted cells. VX-880 is being evaluated in a Phase 1/2 clinical trial for the treatment of T1D.
In October, Vertex announced positive Day 90 data for the first T1D patient in the Phase 1/2 clinical trial of VX-880. The patient was treated with a single infusion of VX-880 at half the target dose in conjunction with standard immunosuppressive therapy. The patient demonstrated rapid and robust improvements in multiple measures, including significant increases in fasting and stimulated C-peptide, improvements in glycemic control as measured by HbA1c, and a 91% decrease in exogenous insulin requirements.
The VX-880 Phase 1/2 study is ongoing at multiple clinical sites in the U.S. and the Clinical Trial Application (CTA) has been approved in Canada.
Vertex is pursuing a second program in which these stem cell-derived, fully differentiated, insulin-secreting islet cells are encapsulated and implanted in an immunoprotective device. IND-enabling studies are underway and Vertex expects to submit an IND for the cells and device program in 2022.
APOL1-mediated Kidney Diseases (AMKD)
Vertex is evaluating the potential of oral, small molecule inhibitors of APOL1 function to treat people with AMKD.
Enrollment is complete in the Phase 2 proof-of-concept study evaluating VX-147 for the treatment of people with APOL1-mediated focal segmental glomerulosclerosis (FSGS) with reduction of proteinuria as the primary endpoint. Results from this study will be reported in the fourth quarter of 2021 and will inform the potential progression of VX-147 into pivotal studies in the broader population of people with APOL1-mediated non-diabetic proteinuric kidney diseases.
Preclinical data for VX-147 will be presented at the American Society of Nephrology Annual Meeting, November 4-7, 2021.
Pain (NaV1.8)
Vertex has discovered multiple selective small molecule inhibitors of NaV1.8 with the objective of creating a new class of medicines that have the potential to be highly effective for both acute and chronic pain, without the limitations of opioids and other existing pain medications.
Two Phase 2 dose ranging acute pain studies with VX-548 are underway, one following bunionectomy surgery and the other following abdominoplasty surgery. Data from the acute pain studies are expected in Q1 2022.
Alpha-1 Antitrypsin (AAT) Deficiency
Vertex plans to advance one or more novel small molecule zAAT correctors into the clinic in 2022.
Investments in External Innovation
To further expand our capabilities in gene editing, Vertex recently announced two new collaborations.
In August, Vertex announced a new collaboration with Arbor Biotechnologies Inc. to enhance efforts in developing ex vivo engineered cell therapies for multiple serious diseases using Arbor’s proprietary CRISPR gene-editing technology.
In October, Vertex announced a new collaboration with Mammoth Biosciences to develop in vivo gene-editing therapies for two diseases using Mammoth’s next-generation CRISPR systems.