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How Vertex Pharmaceuticals Is Positioned Financially

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Revenue trends

In the first half of this year, Vertex Pharmaceuticals’ (VRTX) revenue grew ~40% YoY (year-over-year) to $1.4 billion from $994.6 million. Kalydeco, Orkambi, and Symdeko saw revenue of $253.0 million, $311.0 million, and $186.0 million, respectively, in Q2 2018, compared with $250.0 million, $354.0 million, and $34.0 million, respectively, in Q1 2018. Vertex’s revenue growth could boost the First Trust NYSE Arca Biotechnology Index ETF (FBT), of which Vertex comprises ~3.33%.

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Expense and earnings trends

In the first half this year, Vertex reported costs of sales, R&D (research and development), and SG&A (selling, general, and administrative) expenses of $176.0 million, $648.1 million, and $267.1 million, respectively, compared with $118.2 million, $563.0 million, and $240.6 million in the first half of 2017. In H1 2018, it reported net income and diluted EPS of $417.6 million and $1.61, respectively, compared with $265.8 million and $1.06 in H1 2017.

Financial outlook and clinical pipeline

Vertex anticipates net product revenue of $2.65 billion–$2.80 billion in fiscal 2018, and GAAP R&D and SG&A expenses of $1.80 billion–$1.95 billion. The company is conducting a Phase 3 trial investigating a triple-combination regimen (VX-445, tezacaftor, and ivacaftor) for the treatment of cystic fibrosis patients over 12 years old.

Vertex is also conducting four clinical studies to evaluate the safety and efficacy of triple-combination therapies with VX-659 and VX-445 in cystic fibrosis patients. Vertex Pharmaceuticals plans to submit new drug applications for VX-659 and VX-445 in the second half of 2019.

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