How Are Orkambi and Kalydeco Positioned after 2Q17?

In 2Q17, Vertex Pharmaceuticals’ (VRTX) Orkambi generated revenues of around $324 million, which reflected a whopping ~32% growth on a year-over-year (or YoY) basis and ~10% growth on a quarter-over-quarter basis. In 1H17, Orkambi reported revenues of around $619 million compared to $468 million in 1H16.

The above graph represents the revenue curve of Vertex Pharmaceuticals’ Orkambi and Kalydeco from 2Q16 to 2Q17.

In 2Q17, Kalydeco generated revenues of around $190 million, which reflected ~6% growth on a YoY basis and ~2% growth on a quarter-over-quarter basis. In 1H17, Kalydeco generated revenues of around $376 million compared to $351 million in 1H16.

In July 2017, the U.S. Food and Drug Administration (or FDA) approved Kalydeco for use in more than 600 individuals with cystic fibrosis aged two years or above and had one of five residual function mutations that manifest in a splicing defect in the cystic fibrosis transmembrane conductance regulator (or CFTR) gene. The FDA approval was based on a phase three trial with Kalydeco on cystic fibrosis patients with CFTR gene mutation.

Vertex Pharmaceuticals anticipates Kalydeco revenues to be in the range of $740 million to $770 million in fiscal 2017.

Vertex Pharmaceuticals’ peers in the rare disease market include Alexion Pharmaceuticals (ALXN), BioMarin (BMRN), Shire Pharmaceuticals, Amgen (AMGN), Sanofi Genzyme, Pfizer, and others. Growth in sales of Orkambi and Kalydeco could boost the share prices of Vanguard Growth ETF (VUG). Vertex Pharmaceuticals accounts for about ~0.37% of VUG’s total portfolio holdings.