Vertex Pharmaceuticals (NASDAQ:VRTX) is best known for its cystic fibrosis therapies. Having achieved near universal coverage of CF patients in the industrialized nations it is now expanding its disease targets to several areas where its expertise should give it a competitive advantage. This expansion will likely include licensing deals or even acquisitions of smaller clinical-stage biotechnology companies. While it looks like the fantastic growth rate we saw in 2020 will slow down in 2021, I believe the company is attractively priced for longer-term investors. This assumes that, with an expanding pipeline of clinical-stage drugs, at least some new products will achieve regulators' approval and market success in this decade. This article will review Q4 2020 results, give a summary review of the current pipeline, and then focus on the business development strategy.
The usual pharmaceutical caveats apply. In particular, the success of Vertex in validating and getting regulatory approval for its CF drugs may show competence, but it does not guarantee success for the drugs in its pipeline. Even when a drug achieves commercial success, it can later be replaced by a competitor, and in any case will eventually lose patent protection.
Q4 2020 Vertex results
Q4 2020 continued to show phenomenal revenue growth based on the introduction of Trikafta for CF. While Vertex's three older CF drugs had declining y/y sales, Trikafta generated $1.09 billion in Q4 2020, up 160% from $420 million in Q4 2019. Total Vertex revenue was up 15% y/y to $1.63 billion. That resulted in GAAP net income of $604 million, up 4% y/y. GAAP EPS was $2.30, up 3% y/y. Non-GAAP net income was $661 million, and EPS was $2.51.
To a large extent Trikafta is replacing the earlier drugs, as well as treating new patients who did not have the right mutations to be
