Vertex Earnings: Robust Uptake of Trikafta/Kaftrio Drives Sales; Pipeline Makes Significant Progress

Vertex ended 2023 in a strong position thanks to strong uptake of its cystic fibrosis triple combination therapy, Trikafta/Kaftrio, which accounted for 91% total sales in 2023. Product revenue of $9.87 billion represented an 11% increase compared with 2022. In addition, Vertex’s diverse pipeline in disease areas outside of cystic fibrosis is making significant advancements. Vertex is on track to submit two new drug applications to the U.S. Food and Drug Administration by mid-2024 for both VX-548 in acute pain and vanzacaftor triple in cystic fibrosis. We have increased our estimated probabilities of approval for these pipeline candidates to 65% in our base case and raised our fair value estimate to $343 per share from $314. Vertex’s lengthy patent protections extending to 2037 and first-mover status in the lucrative cystic fibrosis market continue to support its narrow economic moat rating while also providing ample cash flow to support the development of its broad pipeline.