How Kalydeco Could Be Vertex’s Steady Revenue Story



Kalydeco’s revenue trend

In 2016, Vertex Pharmaceuticals’ (VRTX) Kalydeco reported revenues of around $703 million, which represents ~11% growth on a YoY (year-over-year) basis. In 2016, the drug contributed ~41% of the company’s total revenues. In 1Q17, Kalydeco generated revenues of around $186 million, which reflected 5% growth QoQ (quarter-over-quarter) and 9% growth YoY.

We should note that a one-time event related to reimbursement agreements in Europe led to a ~$9 million increase in the drug’s sales in 1Q17. Vertex has estimated that in fiscal 2017, Kalydeco could generate revenues in the range of $710 million–$730 million.

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The SPDR S&P Biotech ETF (XBI) has about 3.15% of its total portfolio holdings in VRTX. Kalyedeco’s steady revenue growth and sustainability in the marketplace is important for the maintenance of Vertex’s common stock price. The company is among the top holdings in XBI, along with Clovis Oncology (CLVS) and Bluebird Bio (BLUE), which make up around ~3.30% and 2.95%, respectively, of XBI’s total portfolio holdings.

About Kalydeco

Kalydeco (ivacaftor) activates the CFTR (cystic fibrosis transmembrane conductance regulator) protein and helps open the membrane channels (or gating) of the G551D-CFTR protein. CFTR proteins are present in multiple organs and work as a chloride channel.

In cystic fibrosis, due to a mutation in the CFTR protein, this chloride ion movement gets blocked. Kalydeco facilitates the chloride ion transport by activating the gating probability of the G551D-CFTR protein.

FDA approval

In May 2017, the FDA (US Food and Drug Administration) approved Kalydeco for the treatment of individuals above two years old with cystic fibrosis and had one of the 23 residual function mutations in the CFTR gene. Vertex has estimated that in the US, over 900 people above two years old have cystic fibrosis with a mutation in at least one of the CFTR gene. Regulatory approval could boost the drug’s sales in 2017.

Notably, pharma giant Pfizer (PFE) and Cystic Fibrosis Foundation Therapeutics, a non-profit subsidiary of the CFF (Cystic Fibrosis Foundation) have been working in collaboration since 2010 for the development of effective therapy for cystic fibrosis.

For more on Kalydeco, please refer to Market Realist’s “Is Kalydeco Positioned Well Enough to Achieve Sustained Growth?


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