On January 26, 2022 Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) reported consolidated financial results for the fourth quarter and full year ended December 31, 2021 and provided full year 2022 financial guidance (Press release, Vertex Pharmaceuticals, JAN 26, 2022, View Source [SID1234607401]).
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"In 2021, Vertex delivered exceptional financial performance, including 22% revenue growth, coupled with important progress across our business. We expanded our leadership in cystic fibrosis– treating more patients than ever before and advancing our next-in-class triple regimen into pivotal studies. In addition, our pipeline beyond CF accelerated and delivered important clinical data in new disease areas," said Reshma Kewalramani, M.D., Chief Executive Officer and President of Vertex. "As we move into 2022, with multiple programs in mid- and late-stage development, there are important milestones ahead. With continued innovation in CF and progress across our pipeline, we are poised to serve many more patients and drive revenue and earnings growth in 2022 and many years into the future."
Full Year 2021 Results
Product revenues increased 22% to $7.57 billion compared to 2020, primarily driven by the launch of KAFTRIO in multiple countries internationally and the performance of TRIKAFTA in the U.S., including the launch of TRIKAFTA in children 6-11 years old in the U.S. Net product revenues in 2021 increased 10% to $5.29 billion in the U.S. and increased 66% to $2.29 billion outside the U.S., compared to 2020.
GAAP net income decreased compared to 2020, primarily due to a $900 million payment in connection with the amendment of Vertex’s collaboration with CRISPR Therapeutics that was recorded as a GAAP R&D expense in the second quarter of 2021.
Non-GAAP net income increased compared to 2020, driven by strong product revenue growth.
Cash, cash equivalents and marketable securities as of December 31, 2021 were $7.5 billion, an increase of approximately $0.9 billion compared to December 31, 2020. The increase was primarily driven by strong operating cash flow partially offset by repurchases of our common stock authorized under our share repurchase programs and the $900 million payment to CRISPR Therapeutics.
Combined GAAP R&D and SG&A expenses increased compared to 2020, primarily due to the $900 million payment to CRISPR in the second quarter of 2021.
Full Year 2021 Results
Product revenues increased 22% to $7.57 billion compared to 2020, primarily driven by the launch of KAFTRIO in multiple countries internationally and the performance of TRIKAFTA in the U.S., including the launch of TRIKAFTA in children 6-11 years old in the U.S. Net product revenues in 2021 increased 10% to $5.29 billion in the U.S. and increased 66% to $2.29 billion outside the U.S., compared to 2020.
GAAP net income decreased compared to 2020, primarily due to a $900 million payment in connection with the amendment of Vertex’s collaboration with CRISPR Therapeutics that was recorded as a GAAP R&D expense in the second quarter of 2021.
Non-GAAP net income increased compared to 2020, driven by strong product revenue growth.
Cash, cash equivalents and marketable securities as of December 31, 2021 were $7.5 billion, an increase of approximately $0.9 billion compared to December 31, 2020. The increase was primarily driven by strong operating cash flow partially offset by repurchases of our common stock authorized under our share repurchase programs and the $900 million payment to CRISPR Therapeutics.
Combined GAAP R&D and SG&A expenses increased compared to 2020, primarily due to the $900 million payment to CRISPR in the second quarter of 2021.
Combined Non-GAAP R&D and SG&A expenses increased compared to 2020, primarily due to the advancement and expansion of Vertex’s pipeline and incremental investment to support the launches of Vertex’s medicines globally.
GAAP income taxes decreased compared to 2020, primarily due to the income tax impact of the $900 million payment to CRISPR and the impact of discrete tax events in 2021 compared to 2020 (Note 1).
Non-GAAP income taxes increased compared to 2020, primarily due to Vertex’s increased operating income.
Fourth Quarter 2021 Results
Product revenues increased 27% to $2.07 billion compared to the fourth quarter of 2020, primarily driven by the strong launches of KAFTRIO in Europe and the performance of TRIKAFTA in the U.S. Net product revenues in the fourth quarter of 2021 increased 16% to $1.39 billion in the U.S. and increased 61% to $679 million outside the U.S., compared to the fourth quarter of 2020.
GAAP and Non-GAAP net income increased compared to the fourth quarter of 2020, driven by strong product revenue growth.
Combined GAAP R&D and SG&A expenses increased compared to the fourth quarter of 2020, primarily due to the advancement and expansion of Vertex’s pipeline, incremental investment to support
the launches of Vertex’s medicines globally, increased collaborative payments related to our business development activities and increased stock-based compensation expenses.
Combined Non-GAAP R&D and SG&A expenses increased compared to the fourth quarter of 2020, primarily due to the advancement and expansion of Vertex’s pipeline and incremental investment to support the launches of Vertex’s medicines globally.
GAAP income taxes decreased compared to the fourth quarter of 2020, primarily due to the impact of discrete tax events recognized in the fourth quarter of 2021 (Note 1) and the income tax impact on sales of certain strategic investments in the fourth quarter of 2020.
Non-GAAP income taxes increased compared to the fourth quarter of 2020, primarily due to Vertex’s increased operating income.
Full Year 2022 Financial Guidance
Vertex today provided full year 2022 financial guidance. Vertex’s product revenue guidance is primarily based on expectations for continued strong performance of TRIKAFTA in the U.S., and KAFTRIO outside the U.S. Vertex’s product revenue guidance reflects management’s expectations for approved products in countries where Vertex has already secured reimbursement.
Key Business Highlights
Cystic Fibrosis (CF) Marketed Products
Vertex anticipates the number of CF patients treated with our medicines will continue to grow as the uptake of TRIKAFTA in the U.S. and the launches of KAFTRIO outside the U.S. continue, we enter into additional reimbursement agreements and achieve new approvals for the treatment of younger patients. Recent progress includes:
•In January 2022, the European Commission and the UK’s Medicines and Healthcare Products Regulatory Agency (MHRA) approved a label extension for KAFTRIO (ivacaftor/tezacaftor/
elexacaftor) in a combination regimen with ivacaftor, for the treatment of CF in children ages 6 through 11 years old who have at least one F508del mutation in the CF transmembrane conductance regulator (CFTR) gene. With these approvals, approximately 1,900 children will be newly eligible for KAFTRIO.
•In the fourth quarter of 2021, we secured additional reimbursement approvals for KAFTRIO (ivacaftor/tezacaftor/elexacaftor) in a combination regimen with ivacaftor for the treatment of CF for eligible patients, including national reimbursement agreements in Spain and the Netherlands. The agreements generally cover people with CF ages 12 years and older who have at least one copy of the F508del mutation and allow us to introduce KAFTRIO in these markets.
•The Phase 3 study of ORKAMBI in patients 12 to 24 months of age met its primary endpoint. ORKAMBI was well tolerated in this patient population, and no new safety concerns were identified. Substantial improvements were seen in sweat chloride, the secondary endpoint of the study. Based on these data, Vertex intends to submit regulatory filings in the U.S. in Q1 and in Europe in Q2 2022.
TRIKAFTA/KAFTRIO is now approved and reimbursed or accessible in more than 20 countries.
R&D pipeline
Vertex is delivering on a diversified pipeline of potentially transformative small molecule, cell and genetic therapies aimed at serious diseases. Recent and anticipated progress for key pipeline programs is noted below.
Cystic Fibrosis
Vertex continues to pursue next-in-class CFTR modulator therapies as well as new treatment options for the approximately 10% of patients who cannot benefit from CFTR modulators alone.
•Enrollment is underway in two Phase 3 global, randomized, double-blind, active-controlled clinical trials (SKYLINE 102 and SKYLINE 103) evaluating Vertex’s new once-daily investigational triple combination of VX-121/tezacaftor/VX-561 in patients with CF. The SKYLINE 102 and SKYLINE 103 trials are expected to include 950 patients in total and will compare the performance of VX-121/tezacaftor/VX-561 to TRIKAFTA. Enrollment in both trials is expected to be completed by late 2022 or early 2023.
•In collaboration with Moderna, Vertex is evaluating CF mRNA therapeutics designed to treat the underlying cause of CF by enabling cells in the lungs to produce functional CFTR protein for the treatment of the approximately 10% of CF patients who do not produce any CFTR protein. IND-enabling studies are underway, and we plan to submit an IND for this program in 2022.
Beta Thalassemia and Sickle Cell Disease (SCD)
The CTX001 program employs a non-viral ex vivo CRISPR gene-editing therapy, which is being developed as a potential functional cure for transfusion-dependent thalassemia (TDT) and severe sickle cell disease (SCD).
•Enrollment is complete in the ongoing Phase 3 clinical trials in TDT and SCD, with more than 70 patients dosed to date. Vertex anticipates submitting global regulatory filings for CTX001 in TDT and SCD in late 2022.
APOL1-Mediated Kidney Disease (AMKD)
Vertex is evaluating the potential of oral, small molecule inhibitors of APOL1 function to treat people with AMKD.
•In December, Vertex announced that, in a Phase 2 proof-of-concept (POC) study in patients with APOL1-mediated focal segmental glomerulosclerosis (FSGS), VX-147 achieved a statistically significant and clinically meaningful mean reduction of 47.6% in the urine protein to creatinine ratio (UPCR) at Week 13 compared to baseline, on top of standard of care. VX-147 was well tolerated, with no treatment discontinuations due to adverse events and no serious adverse events considered related to study drug. These results provided the first clinical evidence and POC that an oral small molecule APOL1 inhibitor can decrease proteinuria in patients with APOL1-mediated kidney disease. Vertex anticipates completing its end of Phase 2 meeting with regulators and initiating pivotal development of VX-147 in AMKD in the first quarter of 2022.
Type 1 Diabetes (T1D)
Vertex is evaluating cell therapies designed to replace insulin-producing islet cells that are destroyed in people with T1D with the goal of developing a potential functional cure for this disease.
•VX-880 is a stem cell-derived, fully differentiated islet replacement therapy, using standard immunosuppression to protect the implanted cells. VX-880 is being evaluated in a Phase 1/2 clinical trial for the treatment of T1D.
•In January, Vertex announced Day 150 data for the first T1D patient in the Phase 1/2 clinical trial, treated with a single infusion of VX-880 at half the target dose. These data demonstrated robust improvements in fasting C-peptide (levels increased to 404 pmol/L) and glycemic control, with HbA1c reaching 6.7% and daily exogenous insulin requirement at 2 units, providing evidence of a clinically meaningful therapeutic effect of this single treatment with VX-880.
•The VX-880 Phase 1/2 study is ongoing in the U.S. and Canada. Enrollment and dosing continues and Vertex expects to share data from more patients and report longer-term follow up in 2022.
•Vertex is pursuing additional programs in T1D, in which these stem cell-derived islets are encapsulated and implanted in an immunoprotective device or modified to produce hypoimmune stem cell islets. IND-enabling studies for the cells plus device program are underway, and we plan to submit an IND in 2022.
Pain (NaV1.8)
Vertex has discovered multiple selective small molecule inhibitors of NaV1.8 with the objective of creating a new class of medicines that have the potential to be highly effective for both acute and chronic pain, without the limitations of opioids and other existing pain medications.
•Vertex is conducting two Phase 2 dose ranging acute pain studies with VX-548, one following bunionectomy surgery and the other following abdominoplasty surgery. Vertex expects to obtain data from both studies in Q1 2022.
Alpha-1 Antitrypsin (AAT) Deficiency
•Vertex plans to advance one or more novel small molecule zAAT correctors into the clinic in 2022.
Consistent with its overall strategy, Vertex takes a portfolio approach to all of its programs, with additional assets in CF, SCD, Beta Thalassemia, AMKD, T1D, Pain, and AATD in earlier stages of development.