Vertex Pharmaceuticals (NASDAQ:VRTX) is proof that Wall Street doesn't always reward companies with monopolies. It markets the only approved drugs that treat the underlying cause of cystic fibrosis (CF), but the company's shares have fallen 30% from the highs set in 2020.
The big drugmaker announced its first-quarter results after the market closed Thursday. However, the update didn't move the needle much, with the biotech stock moving less than 1% higher in after-hours trading. Here are the highlights of Vertex's Q1 update.
By the numbers
Vertex reported revenue in the first quarter of $1.72 billion, a 14% year-over-year jump. This result topped the average analysts' revenue estimate of $1.66 billion.
The company also delivered solid improvement on its bottom line. Vertex announced net income of $653 million, or $2.49 per share, based on generally accepted accounting principles (GAAP). In the prior-year period, its GAAP earnings totaled $603 million, or $2.29 per share.
Vertex recorded Q1 adjusted net income of $781 million, or $2.98 per share, up from $674 million, or $2.56 per share, in the prior-year period. This figure easily beat the consensus Wall Street adjusted earnings estimate of $2.69 per share.
The biotech ended the first quarter with cash, cash equivalents, and marketable securities totaling $6.9 billion. This reflected an increase of $265 million from the end of 2020.
Behind the numbers
Vertex's revenue growth in the first quarter was driven entirely by Trikafta/Kaftrio. The CF drug generated net sales of $1.19 billion in the period, up 33% year over year. Most of this growth came from increased uptake in Europe.
However, these gains were partially offset by declining revenue for all of the company's other CF drugs. Sales for Symdeko/Symkevi fell nearly 28% year over year to $125 million. Orkambi pulled in Q1 sales of $219 million, down 6% from the prior-year period. Sales for Kalydeco slid nearly 13% lower to $186 million.
While Vertex's solid revenue growth trickled down to its bottom line, the biotech's spending also increased. Research and development costs rose nearly 2% year over year to $456 million. Selling, general, and administrative costs increased 5% to $192.1 million. In addition, the company's provision for income tax nearly tripled year over year to $167.8 million due in large part to a big tax benefit in the prior-year period.
Vertex anticipates that its revenue growth rate will slow down this year. The company projects full-year 2021 sales of between $6.7 billion and $6.9 billion. The midpoint of this range reflects an increase of nearly 10% compared to 2020.
This means that investors will need to look more to Vertex's pipeline for catalysts. The biotech appears to be increasingly confident about the prospects for CTX001, which it's developing with CRISPR Therapeutics. Vertex recently amended its agreement with CRISPR to up its share of development expenses and potential profits for the gene-editing therapy to 60% from 50% in exchange for an upfront payment of $900 million.
The company also has important clinical updates on the way soon. Vertex expects to report results from a phase 2 study of VX-684 in treating alpha-1 antitrypsin deficiency, a rare genetic liver disease, in the second quarter of 2021. Results from another phase 2 study evaluating VX-147 in treating APOL1-mediated focal segmental glomerulosclerosis, a disease that causes scarring in the kidney, are also expected later this quarter.
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