Kalydeco - Vertex Pharmaceuticals

Kalydeco (ivacaftor)
Vertex Pharmaceuticals
Launch Date: January 2012
First-Year Sales: $171.6 million (partial 2012)
First-Half 2013 Sales: $160.8 million
Analyst Estimate for 2018: $2.66 billion

To call cystic fibrosis pill Kalydeco a game-changer would be an understatement. When Cambridge, MA-based Vertex Pharmaceuticals ($VRTX) launched the drug in early 2012, it was the first approved treatment to address the underlying cause of the disease rather than its symptoms. Kalydeco markedly improves lung function in patients with a particular genetic mutation, dubbed G551D, which affects only 4% of the 70,000 CF patients worldwide.

To offset that cap on sales potential, Vertex priced the drug at $294,000. It did set up copay help for eligible patients; when Kalydeco was launched, about 60% of patients had commercial insurance, with government programs covering the remainder. Vertex said its copay assistance program would cover up to $88,000 of privately insured patients' coinsurance or copayments, and that patients would have case managers to help them through payer bureaucracies.

The result was a rapid uptake in the U.S. in 2012, followed by a similar pattern in Europe once the drug hit major markets there. In late July, on the company's most recent earnings call, Vertex Chief Commercial Officer Stuart Arbuckle said nearly all the eligible G551D patients in the EU are now using Kalydeco.

That added up to a serious sales boost for Vertex. After recording revenues of $171.6 million in 2012, the drug put up $161 million in the first half of 2013. Second-quarter sales alone amounted to $99 million, up 60% year-over-year.

Though Arbuckle said the company doesn't see meaningful growth for Kalydeco in the remainder of 2013, things could change come 2014 if the drug wins public reimbursement in Australia and Canada. And just a few days ago, Vertex submitted a Supplemental New Drug Application to the FDA for approval in CF patients with at least one non-G551D gating mutation, a group comprising about 400 people worldwide.

The long-term potential for Kalydeco is even greater if trial data goes Vertex's way. The company is testing two combination cocktails in patients with a much more common genetic mutation. Each combination pairs Kalydeco with a different experimental treatment, either VX-809 or VX-661. Success with these trials could expand Kalydeco's market to 90% of CF patients. That, in turn, could take the drug well past the blockbuster benchmark with peak annual sales estimated as high as $5 billion to $6 billion.

For more:
EU OKs Vertex cystic fibrosis drug Kalydeco
Bungled analysis forces Vertex to revise cystic fibrosis data
Vertex backs up pricey new CF drug with co-pay help
Kalydeco ranks among 12 priciest drugs in U.S.

-- Carly Helfand (email | Twitter)

Kalydeco - Vertex Pharmaceuticals