Vertex scores new Orkambi market but chops sales guidance anyway

Orkambi

Vertex won a label expansion for cystic fibrosis combo Orkambi late Wednesday--but, as expected, the company lowered its full-year sales guidance for the med, too.

Orkambi is now approved to treat CF in children ages 6 through 11 who have two copies of the F508del mutation, the company said. The new indication will add about 2,500 patients to the therapy’s eligible treatment pool, giving Vertex its “most significant growth potential this year,” Evercore ISI analyst John Scotti wrote in a note to clients.

But while the new patients may boost Orkambi, sales of the therapy have been suffering from a summer slowdown that execs raised with investors during a fireside chat earlier this month. Vertex officially cut its expectations for the drug Wednesday, dropping 2016 guidance to a range of $950 million to $990 million from the $1 billion to $1.1 billion haul they had previously predicted.

The new regulatory go-ahead is part of Vertex's effort to expand into younger patients globally--a push that could help offset the reimbursement roadblocks holding Orkambi back. CFO Ian Smith recently told Leerink Partners analyst Geoffrey Porges that Vertex was only treating about 10,000 patients of the 27,000 Orkambi was approved for at the time.

One good sign? Children on Kalydeco--one of Orkambi’s component meds--have shown slightly higher compliance rates than adults on the therapy, which Vertex attributes to “high parental involvement” in treatment, Smith told Porges. "[M]anagement expects a similar relative trajectory for Orkambi in younger patients: a comparable uptake trajectory (to that observed in adolescents and adults), but higher compliance,” Porges wrote in a research note, meaning the new label expansion could be especially lucrative. 

Vertex still faces plenty of hurdles, though, if it wants to get Orkambi moving. Slow uptake in Germany is weighing the therapy down, as reimbursement setbacks hamper the product’s potential. The company expects a final pricing decision there by mid-December, though, and Vertex predicts Germany's verdict will “read through to other major European markets, notably the U.K., France, Spain, Italy, and Ireland--all of which have large populations of CF patients,” Porges wrote.

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