Vertex Spends Its CF Growth on New Launches: Rapid Earnings Reaction
Key Points
Alyftrek is replacing Trikafta, and that switch is still growing Vertex's cystic fibrosis franchise.
Heavy spending on new launches and the Crinetics deal kept profit from rising with sales.
An FDA decision on a kidney drug later this month is the next big test.
Vertex Pharmaceuticals (NASDAQ:VRTX) grew third-quarter revenue 12% to $3.44 billion, as patients kept moving to its newer cystic fibrosis (CF) drug, Alyftrek. Shares rose about 1.5% in early after-hours trading. Adjusted profit was flat, though, because Vertex is spending its CF gains on new launches and the Crinetics deal. Profit will likely trail sales until those bets pay off.
Key numbers
- Total revenue: $3.44 billion, up 12% year over year.
- Alyftrek revenue: $706 million, up from $247 million.
- Non-CF revenue (Casgevy, Journavx, and Palsonify): $168 million, up from $37 million.
- Diluted EPS: $2.56 GAAP, down from $4.20; $4.76 adjusted, down from $4.80.
What it means
Alyftrek is now replacing Trikafta, not just adding to it. Trikafta sales fell 8% as patients switched to a drug they take once a day instead of twice. With higher net prices on top, CF still grew. It's a steady engine, and it's paying for everything else.
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Spending is soaking up the growth. Adjusted operating income rose only 2%. Vertex is building a kidney-drug sales team before it has a drug to sell, absorbing Crinetics, and still pushing Journavx. Launch costs land before launch revenue does. The steeper GAAP drop came mostly from one-time Crinetics deal costs, not taxes, since the GAAP tax rate didn't change.
Don't read much into the higher revenue forecast. The $50 million bump at the midpoint is about what newly acquired Palsonify is expected to add. Spending guidance went up too, and Vertex now carries debt from the deal.
What to watch next
Watch the FDA's Nov. 30 decision on povetacicept for IgA nephropathy, since Vertex is already spending to launch it. Interim data on VX-670 in myotonic dystrophy is also due by year-end.
David Kretzmann has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.