Vertex casually drops Orkambi revenue slowdown, creating 'unnecessary drama' for investors

Cystic fibrosis drugmaker Vertex this week informally backed away from its revenue guidance for key med Orkambi--and investors should be just as unhappy with execs’ conduct as they should be about the revenue slip, one analyst says.

Earlier this week, company management referenced a “looming revenue miss” at an investor conference fireside chat, delivering what Leerink Partners’ Geoffrey Porges termed “a backhanded slap” to investors.

“When we look at Q3, one thing we are seeing in the U.S. is actually a slowdown of refills in the July and August timeframe, not something that we anticipated actually,” the company said during the chat--information that “warranted a simple 8-K,” in Porges’ view.

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“Once again the company reduced investors to parsing the tone and language of their comments to glean exactly how bad their operating results might be,” he griped in a Friday note to clients, deeming the episode “unnecessary drama” and noting that “we and investors are legitimately frustrated by this disclosure.”

The way he sees it, offering up causal comments about the slide will likely compound investors’ concerns about the reliability of the Massachusetts’ biotech management team--and even if it doesn’t, it’ll lead them to conclude that Vertex “doesn’t have complete understanding of the revenue trajectory and potential of their key brand.”

Meanwhile, Vertex wouldn’t stand by its guidance for the CF combo med--of $1 billion to $1.1. billion in 2016 sales--in a follow-up conversation with Porges. And while the problem at hand is a seasonal one, Vertex suggested--with patients postponing their refills based on summer vacation schedules--as Porges pointed out, there are other issues with the franchise, too.

Demand in Germany, Vertex’ main international market, isn’t growing the way Vertex thought it would, the company said recently, meaning ex-U.S. revenue could come up short, too. And the combination of those factors could result in a guidance-lowering on the company’s Q3 conference call of at least $25 million--“and possibly more,” Porges figures.

Related Articles:
Hefty Orkambi commercial spend helps Vertex pick up the growth pace
NICE sticks to its guns and turns down Vertex's Orkambi even as patients plead
NICE gives initial thumbs-down to Vertex's CF combo med Orkambi, citing costs
CF specialists up in arms about $259K price for new Vertex med Orkambi

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