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Morningstar | Vertex's 4Q Exceeded Expectations, With Strong Symdeko Launch in U.S.; Maintaining $183 FVE

Narrow-moat Vertex posted product revenue of $868 million, up 40% from last year and 11% sequentially, thanks to its strong cystic fibrosis portfolio and the recent launch of Symdeko in the United States. We'll revisit our model after the firm files its full-year results, but we don't anticipate a significant change to our fair value estimate at this point. Management's full-year outlook for 2019, including revenue guidance of $3.45 billion to $3.55 billion was mostly in line with our expectations. Guidance of over $2 billion in 2019 operating spending was slightly more than we had expected but still reasonable, given increased global marketing efforts for upcoming triple combination therapies. We think additional reimbursement agreements could provide upside to management's top-line guidance, which only includes current reimbursements. Although the company still hasn’t reached an agreement in England (where the National Institute for Health and Care Excellence initially rejected the company's offer for Orkambi in 2016 due to its high price), we were pleased to hear about progress in talks with regulatory bodies in Scotland.

Looking ahead, we expect phase 3 data for the VX-445 triple combination for cystic fibrosis in the first quarter of 2019, as well as phase 2b data from VX-150 for pain in the first half of 2019. If approved, the company's triple combination regimens could significantly expand Vertex's addressable patient population in cystic fibrosis, and pain represents multiple market opportunities if VX-150 shows potential in both acute and chronic pain. We model the triple combination regimens launching globally by the end of 2020.