Biotech company Vertex Pharmaceuticals (NASDAQ:VRTX) missed Wall Street’s revenue expectations in Q1 CY2025 as sales rose 3% year on year to $2.77 billion. The company’s full-year revenue guidance of $11.88 billion at the midpoint came in 0.9% below analysts’ estimates. Its non-GAAP profit of $4.06 per share was 5.4% below analysts’ consensus estimates.
Revenue: $2.77 billion vs analyst estimates of $2.83 billion (3% year-on-year growth, 2.3% miss)
Adjusted EPS: $4.06 vs analyst expectations of $4.29 (5.4% miss)
Adjusted EBITDA: $1.23 billion vs analyst estimates of $1.31 billion (44.5% margin, 6.2% miss)
The company reconfirmed its revenue guidance for the full year of $11.88 billion at the midpoint
Operating Margin: 22.7%, down from 42.4% in the same quarter last year
Free Cash Flow Margin: 28.1%, down from 46% in the same quarter last year
Market Capitalization: $112.6 billion
StockStory’s Take
Vertex Pharmaceuticals’ first quarter results were shaped by ongoing expansion of its cystic fibrosis (CF) portfolio, early contributions from recently launched products, and higher research and development investment. Management pointed to the initial launch of ALYFTREK, a fifth CF therapy, and the rollout of JOURNAVX, a non-opioid pain medication, as key contributors to revenue growth, while also noting increased spending to support pipeline advancement and new product launches. CEO Reshma Kewalramani stated, “We continue to reach more patients with more products and delivered $2.77 billion in revenue in the first quarter, representing 3% growth versus Q1 2024.”
Key Insights from Management’s Remarks
Vertex’s Q1 performance was driven by progress in new product launches, regulatory expansion, and pipeline advancement, while revenue was impacted by specific geographic headwinds and increased operational costs.
ALYFTREK Launch Momentum: Management highlighted early positive feedback from physicians and patients on ALYFTREK, emphasizing its convenience (once-daily dosing), expanded mutation coverage, and lower royalty burden, which extends patent protection into 2039. Uptake is broadest among newly eligible CF patients and those seeking alternative dosing or improved CFTR function.
JOURNAVX Commercial Rollout: The launch of JOURNAVX, a non-opioid option for moderate to severe acute pain, has seen widespread pharmacy stocking and growing payer coverage. The product reached 25,000 prescriptions by late April, and management expects volume ramp to precede revenue as patient assistance programs are phased out with broader coverage.
CASGEVY Uptake Building: CASGEVY, the company’s gene-edited therapy for sickle cell disease and beta-thalassemia, is seeing increased adoption as more treatment centers are authorized and reimbursement is secured in the U.S., Europe, and the Middle East. Management noted acceleration in patient referrals and cell collections as familiarity with the treatment process grows.
Pipeline Advancement and R&D Spend: Vertex is advancing multiple late-stage programs, including pivotal trials in diabetic peripheral neuropathy, type 1 diabetes, and kidney diseases. The company is also expanding its pivotal-stage pipeline to include povetacicept in membranous nephropathy, reflecting the broadening focus beyond CF.
Geographic Revenue Headwinds: International revenue was negatively affected by the availability of an illegal copy product in Russia, which management quantified as a $100 million headwind for the quarter. This issue is expected to impact full-year results but is isolated to that region.
Drivers of Future Performance
Management expects future performance to be driven by the continued uptake of new launches, expansion into additional indications, and the execution of multiple pivotal trials, while also noting potential headwinds from geographic and reimbursement dynamics.
New Product Uptake: Management believes that broader adoption of ALYFTREK and JOURNAVX, supported by expanded payer coverage and physician familiarity, will be a key driver of revenue growth for the remainder of the year.
Pipeline Milestones: Upcoming readouts and regulatory submissions from pivotal trials in diabetic peripheral neuropathy, type 1 diabetes, and kidney diseases are expected to influence both medium- and long-term growth prospects.
Operational and Geographic Risks: The company faces ongoing risks related to international revenue, particularly in Russia, as well as reimbursement timing for new therapies, which may affect the pace of revenue realization.
Top Analyst Questions
Geoffrey Meacham (Citibank): Asked about the main factors influencing physicians to switch to ALYFTREK and the use of sweat chloride as a biomarker. Management emphasized a combination of noninferiority to TRIKAFTA, broader mutation coverage, and dosing convenience rather than reliance on sweat chloride in practice.
Jessica Fye (JPMorgan): Sought clarity on the impact of tariffs and the Russia issue on financials. CFO Charles Wagner stated that current tariffs have an immaterial effect due to a U.S.- and U.K.-centric supply chain, and the Russia headwind is contained and included in guidance.
Salveen Richter (Goldman Sachs): Inquired about early adopters of ALYFTREK and payer coverage for JOURNAVX. Management reported fastest uptake among newly eligible CF patients and outlined goals to maximize access and minimize restrictions for JOURNAVX prescriptions.
Tazeen Ahmad (Bank of America Merrill Lynch): Questioned the patient profile and settings for JOURNAVX prescriptions, and timing for revenue ramp. Management described broad use across surgical and non-surgical pain settings, with volume ramping ahead of recorded revenue due to patient assistance programs.
Evan Seigerman (BMO Capital Markets): Asked about hurdles to CASGEVY adoption. Management cited the need for more authorized treatment centers, increased familiarity with the therapy, and expanded reimbursement as key to accelerating uptake.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of ALYFTREK’s adoption, particularly as it expands into new geographies and patient groups; (2) broader payer and hospital formulary coverage for JOURNAVX, which will determine the transition from volume to revenue growth; and (3) key clinical milestones for late-stage pipeline assets, including pivotal trial completions and regulatory submissions. Progress on these fronts will be critical in tracking Vertex’s execution on its commercial and R&D strategies.
Vertex Pharmaceuticals currently trades at a forward P/E ratio of 23.6×. Is the company at an inflection point that warrants a buy or sell? Find out in our free research report.
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