Higher Discontinuations Are among Orkambi’s Concerns




Orkambi seems to be the current growth driver for Vertex Pharmaceuticals (VRTX). Despite the slow launch of the drug in Germany, the drug is expected to generate $1 billion–$1.1 billion in 2016. But within the first three months of therapy initiation, about 15% of patients discontinued Orkambi following respiratory problems. In the long term, VRTX expects the discontinuation rate to be 20%–30%, and with such a high discontinuation rate, the market remains cautious over the growth prospects of the drug.

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US Refills for the drug in July and August were comparatively slower than VRTX’s expectations. Vertex has confirmed that the slowness in refills isn’t on account of discontinuations. Orkambi has almost reached peak penetration in populations aged 12 years and above in the US. If it’s approved for patients aged 6–11 years, sales might jump. (For more information on Orkambi, please refer to “Orkambi: Recent Addition to the Vertex Portfolio.”)

Wall Street analysts expect the Orkambi to add $1.03 billion in 2016 and $1.6 billion in 2017 to VRTX’s top line. This expectation is in line with Vertex’s revenue guidance for the drug.

Orkambi’s expansion in Europe

In Europe, Orkambi is currently labeled for 12,000 patients. Of this population, 80%–85% of the patients are in the UK, Germany, France, Italy, and Spain. Hence, winning reimbursements in these five countries is Vertex’s first priority.

Vertex’s label expansion strategy for Orkambi and Kalydeco is in line with other biotechnology companies that rely on their key drugs for success. Regeneron’s (REGN) Eylea, Alexion Pharmaceuticals’ (ALXN) Soliris, and Medivation’s (MDVN) Xtandi are some of the drugs that have grown through label expansion.

If you want exposure to Vertex, you can always invest in ETFs like the First Trust NYSE Arca Biotechnology Index Fund (FBT). Vertex accounts for ~3.2% of FBT’s total assets.

Continue to the next part for detailed information on another important cystic fibrosis drug.


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