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Vertex: A Cystic Fibrosis Portfolio Driven Company

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How did Kalydeco and Orkambi perform in 1Q16?

Currently, Vertex Pharmaceuticals (VRTX) is thoroughly a CF (cystic fibrosis) oriented drug company, with two commercialized products, Kalydeco and Orkambi, in its arsenal.

During 1Q16, Kalydeco earned $171 million, translating to a 31% rise on an annual basis. Recently approved Orkambi earned $223 million.

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Vertex’s revenue contributors to date

Incivek, Vertex’s first commercialized drug, was indicated for genotype 1 HCV (Hepatitis C virus). It earned significant revenue for Vertex. However, it was withdrawn from the US market following falling revenues with the launch of Gilead Sciences’ (GILD) Sovaldi.

After Incivek, Kalydeco became a major revenue source for the company. For more information on the revenue contributions from these two drugs, you can refer to Vertex Will Focus on Cystic Fibrosis Market in 2016. With the recent launch of Orkambi, now Orkambi is expected to outpace Kalydeco in revenue share.

How much will Kalydeco and Orkambi add to Vertex’s top line in 2016?

For 2016, Vertex anticipates Orkambi to earn $1 billion–$1.1 billion, whereas Kalydeco could add $685 million–$705 million to Vertex’s top line. For details on Kalydeco, you can refer to Vertex’s Cystic Fibrosis Drugs and Their Controversial Prices.

Although both drugs target CF, there isn’t any cannibalization between them. Kalydeco treats CF patients with residual function mutation, while Orkambi treats patients with F508del mutation. For more details on Orkambi, you can read Vertex Pharmaceuticals’ New Drug Orkambi Receives FDA Approval and Orkambi: Recent Addition to the Vertex Portfolio.

Other companies that are into orphan drug development include Alexion Pharmaceuticals (ALXN) and BioMarin (BMRN).

To diversify the risk of investing directly in Vertex Pharmaceuticals, investors can look for options such as the Vanguard Growth ETF (VUG). The fund has 0.22% of its total holdings in Vertex.

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