After sluggish sales growth marred the early quarters of its Orkambi launch, Vertex Pharmaceuticals socked more money into its commercial efforts. Now, that's paying off. The cystic fibrosis med, key to Vertex's growth plans, took a big leap forward in third-quarter results announced Tuesday.
Launched in July 2015, Orkambi saw year-over-year sales growth of 79% to $234 million. And on the heels of a new FDA approval in children aged 6 to 11, company execs now expect higher sales next quarter, too, as new patients begin treatment.
But Orkambi's third-quarter performance wasn't enough to put it on track for the annual target set earlier this year. The company recently cut its expectations for the drug to subblockbuster levels--$950 million to $990 million--from a previous $1 billion to $1.1 billion. The older CF med Kalydeco turned in a 6% sales increase on the period to $176 million, and Vertex continues to expect $685 million to $705 million for the year.
All told, the company’s cystic fibrosis business expanded 38% to $410 million in the third quarter.
Vertex has higher hopes down the road. Orkambi combines Kalydeco (ivacaftor) with another active ingredient, lumacaftor, and the company has other combos in the works as well. Those efforts hit a snag in August, when the company abandoned a Phase III trial that combined Kalydeco with the experimental med VX-661 (tezacaftor) in a specific set of cystic fibrosis patients. It wasn’t all bad, though; many had expected the trial halt, and three other Kalydeco combo trials in the VX-661 program continue.
In fact, separately on Tuesday, Vertex said it would kick off two Phase II trials to test next-gen cystic fibrosis fighters VX-440 and VX-152 in triple-combo trials with Kalydeco and VX-661.
VX-661 saw no safety concerns in the canceled study, a fact that helps the prospect’s chances in the other trials. If those prove successful, Vertex could widen its patient pool and open up an extra $485 million in revenue potential, analysts have said.
Meanwhile, Vertex is looking to Europe to supplement sales growth in the U.S. Orkambi is close to winning its first reimbursement deal on the continent, Chief Commercial Officer Stuart Arbuckle said during the Tuesday call. Despite a slower-than-expected launch in Germany, Vertex expects to secure reimbursement there in December, Arbuckle said. It's likely to be Orkambi's first contract in the region, but others have progressed to the price-negotiations stage, and he expects Europe to drive “significant revenue growth” next year for Vertex.
Vertex’s third-quarter loss narrowed to $41.8 million from $95.1 million in last year’s third quarter.
Vertex executives made headlines last month when they casually disclosed Orkambi's expected shortfall for the year at a fireside chat. Their discussion about a "looming revenue miss" without an official disclosure to the Securities and Exchange Commission created "unnecessary drama" for investors, Leerink Partners' Geoffrey Porges wrote in a note at the time. The company officially cut its Orkambi guidance soon after.
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