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Vertex sees blockbuster status for cystic fibrosis treatment in first year

The Vertex building at 50 Northern Ave. Craig F. Walker/Globe staff/File/Globe Staff

Vertex Pharmaceuticals Inc. projected Wednesday that its new cystic fibrosis treatment, Orkambi, will ring up sales of at least $1 billion in 2016, making it one of the rare medicines on track for so-called blockbuster status in its first year on the market.

But the company’s estimate that Orkambi will generate between $1 billion and $1.1 billion in revenue this year still fell short of estimates by stock analysts.

Vertex’s projections missed a Wall Street consensus estimate of $1.2 billion, according to a note to investors by Mark Schoenebaum, senior managing director at the New York investment firm Evercore ISI. Shares of Vertex were down in after-hours trading.

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Wednesday’s guidance ended months of guessing by stock analysts on when Boston-based Vertex would offer insight into sales prospects for its most important product. If successful, Orkambi could set the stage for a new era of profitability for Vertex, which has lost money in all but one of its 27 years.

Orkambi, which treats a specific genetic mutation, was approved by the Food and Drug Administration in July for about 8,500 patients age 12 and older. But the two-drug combination eventually could treat about half of the estimated 30,000 Americans with cystic fibrosis, an obstructive lung disease. Orkambi’s wholesale list price is $259,000 a year.

In a conference call with analysts Wednesday evening, Vertex executives said about 65 percent of patients now eligible for Orkambi in the United States have begun taking the medicine. With the company winning broad reimbursement for the treatment from private insurers and all 50 state Medicaid programs, those numbers are expected to increase every quarter into next year.

Chief executive Jeffrey Leiden said Vertex is also working to extend the drug to other US patients, including those ages 6 to 11, and to patients in other countries. Beyond that, he said, Vertex is working on treatments for other CF mutations and new approaches, such as gene editing, for treating CF and other diseases.

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“We have a clear path toward our goal of helping all people with this rare and life-shortening disease in the future,” Leiden said.

Vertex made its long-awaited sales projection as it reported its quarterly financial results swung to a profit of $22 million in the three months ended March 31 from a loss of $148 million a year earlier. Sales of Orkambi and an earlier approved cystic fibrosis drug, Kalydeco, rose more than 200 percent to $394 million in the first quarter, compared with sales of $130 million last year.

The company also boosted its 2016 sales guidance for Kalydeco, which treats a different mutation, to between $685 million and $705 million. This is an increase from prior guidance of $670 million to $690 million.

About 27,000 cystic fibrosis patients worldwide are now eligible to take one of the two Vertex medicines, but only about a third of those are currently doing so, executives said. That percentage will increase as more governments in Europe and elsewhere approve Orkambi and agree to pay for it, the executives told analysts.

Last month, however, a British regulatory agency recommended that Orkambi was too expensive for coverage by government insurance, but payment negotiations are continuing.

“We believe we will achieve broad reimbursement from European payers, just as we’ve seen in the United States,” said Vertex’s chief commercial officer, Stuart Arbuckle.

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The company’s sales projections for Orkambi were based on the assumptions that sales will increase overseas, particularly in the larger German market, and that US regulators will approve the medicine for younger patients later this year.

Asked by analysts whether the company would consider buying back its stock, Vertex’s chief financial officer Ian Smith, said the immediate priority would be plowing profits back into its research and outside investments to expand its drug pipeline.

“At this point, it’s a little too early for us” to repurchase shares, he said.


Robert Weisman
can be reached at robert.weisman@globe.com.