Vertex Pharmaceuticals aims to cure patients with previously incurable diseases. The biotechnology firm uses an integrated, multidisciplinary approach -- employing biophysics, computer-based modeling, and functional genomics -- to speed up the discovery and development of new drugs. Its orphan drugs Kalydeco and Orkambi (launched in 2015) are used to treat cystic fibrosis; the firm is also seeking approval for the medications for other indications. Vertex has other drugs in development, including additional treatments for cystic fibrosis as well as cancer, pain, and the flu. The firm's first drug, the blockbuster hepatitis C treatment Incivek, was discontinued in 2014 after Gilead's popular Sovaldi hit the market.
Vertex received FDA and European Commission approval for Orkambi in 2015. The company is in late-stage trials exploring the use of lumacaftor in combination with ivacaftor in children with cystic fibrosis. Other pipeline programs include VX-66, VX-371, VX-152, and VX-440.
Net product revenues represented some 60% of the company's revenue in 2015.
The company has R&D sites in the US, Canada, and the UK; it has commercial offices in Australia, Canada, France, Germany, Italy, the Netherlands, and Spain.
The US accounted for about three-fourths of Vertex's revenue in 2015, followed by Europe, which accounted for about 20%.
Sales and Marketing
The firm markets its products to physicians through direct contact as well as through advertising, mail-outs, and public relations activities.Advertising expenses totaled $24.5 million in 2015, up from $16.2 million in 2014 and $19.6 million in 2013.
Vertex markets Kalydeco in the US on its own, and it is working to gain approval for the drug in additional countries.
Its top customer, Walgreen, brings in about 20% of total revenue; CVS and Accredo are also large customers, accounting for about 15% of earnings each.
After launching Incivek in 2011, the company began earning product revenues, which brought up total revenue exponentially. However, lower demand for Incivek (in light of the competition provided by Gilead's Sovaldi) caused revenue to decline in 2013 and 2014. The launch of Orkambi and growing sales of Kalydeco brought revenue back up the following year: Revenue rose 78% to $1 billion.
Vertex entered the black for the first time in 2011, but the drop in demand (and ultimate discontinuation) of Incivek, as well as increased R&D costs, led to net losses in 2013 and 2014. However, net loss decreased 25% to $556 million in 2015, thanks largely to the increase in revenue. As of the end of 2015, the company's accumulated deficit totaled $5.3 billion.
Cash flow from operations has followed revenue trends for the company. In 2015, it fell by 36% to $365 million.
Vertex's key strategies for growth include expanding the number of products in its pipeline as well as establishing more collaborations with other research companies. For example, in 2015 it established a collaboration with Parion Sciences to develop cystic fibrosis and other pulmonary disease treatments. Through the agreement, Vertex has global development and commercial rights to Parion's ENaC inhibitors. The company also has a research collaboration with gene editing firm CRISPR Therapeutics to discover and develop potential new treatments.
In 2014, Vertex entered into a license and collaboration agreement with BioAxone to jointly develop VX-210 for the treatment of patients with spinal cord injuries. It also has an agreement with Janssen, which holds the exclusive worldwide license to develop certain flu treatments.