Vertex Pharmaceuticals Incorporated (VRTX) Earnings

Management highlights

### Commercial Operations - CF: Eliftrek is established as the new standard of care, with most new revenue coming from patients switching from Trikafta. In Germany and the UK, over 1/3 of eligible CF patients now use Eliftrek. Expanded labeling for eligible patients ages 2-11 was approved in the U.S. in record time, and global regulatory submissions for younger patient populations are in progress. - Casgevi: Received FDA approval to treat children as young as 2 years old for sickle cell disease and beta thalassemia in 53 days post-filing. Reimbursement agreements are secured in multiple major markets, with H1 2026 patient initiations exceeding full-year 2025 volumes, and three consecutive quarters of over 100 patient initiations. - Genavix: Grew to ~535,000 total prescriptions in Q2 2026, split evenly between hospital and retail channels. 260 million out of 320 million total possible covered lives now have access, with 180 million having unrestricted access. Genavix is now on formulary/protocol at 1400 hospitals and 130 IDNs. Gross-to-net is expected to normalize to branded oral medicine levels in H1 2027. - POVI (IGAN): Full launch preparation is complete, with a 90% experienced renal field force hired, and positive payer engagement ongoing. The BLA is accepted with a November 30, 2026 PDUFA date. ### Research & Development Pipeline - CF: Next-generation VX828 dosing is complete, with data expected H2 2026. Two additional next-gen CF assets (VX581, VX272) are in healthy volunteer studies. The company will only advance assets that outperform Eliftrek by getting more patients to sweat chloride <30mmol/L across all genotypes with once daily dosing and favorable drug properties. - Renal: - POVI: BLA approved for filing in IGAN; Phase 3 portion of the Olympus trial for primary membranous nephropathy is ongoing with the 80mg every 4-week dose selected by the IDMC. The Phase 2 proof-of-concept study for myasthenia gravis is on track to complete enrollment by end-2026. - Enaxaplin (AMKD): The Amplitude Phase 3 trial is on track to complete full enrollment by end-2026, with interim analysis results expected early 2027 that could support an accelerated approval filing. The Amplified Phase 2b expanded population study is complete, with results expected fall 2026. - VX407 (ADPKD): The Aglow Phase 2 study completed enrollment, with ongoing dosing and data maturation. - Type 1 Diabetes: Dosing has resumed in the Zamylocell Phase 1-2-3 trial after a voluntary manufacturing-related pause. IND clearance was obtained for VX017 (universal donor Type O islet cell therapy), which doubles the eligible T1D patient population from ~60,000 to ~120,000. The company is evaluating streamlining regulatory/commercial plans to accelerate VX017, with updated timelines expected end-2026. - Myotonic Dystrophy Type 1 (DM1): Proof-of-concept study results are expected H2 2026. ### Strategic Transaction - Vertex announced a definitive agreement to acquire Krenetics Pharmaceuticals for $8.8 billion net of cash acquired, establishing rare endocrine diseases as the company's fifth therapeutic pillar. Krenetics' lead assets Palsonify and Achumelnant have a combined peak sales opportunity of ~$5 billion, and the acquisition is expected to be accretive to non-GAAP operating income in 2029. The transaction is expected to close in Q3 2026.

Guidance

- Total full-year 2026 revenue guidance is raised to $13.1 billion to $13.2 billion, up from prior guidance. The guidance includes a 150 basis point foreign exchange benefit net of hedging, and does not yet reflect the pending Krenetics acquisition, which is expected to have a modest 2026 impact. Updated guidance will be provided at closing. - Full-year 2026 gross margin is still expected to be just under 86%, consistent with Q2 2026 results. - Combined non-GAAP operating expense guidance of $5.65 billion to $5.75 billion is reaffirmed, though the company now expects to come in at the high end of the range, reflecting increased investments in late-stage pipeline and new commercial infrastructure. - Full-year 2026 non-GAAP effective tax rate guidance is maintained at 19.5% to 20.5%. - The company reaffirms the expectation of at least $500 million in 2026 combined revenue from non-CF products (Casgevi and Genavix), and remains on track to triple 2025 prescriptions and revenue for Genavix in 2026.

Segment performance

1. Cystic Fibrosis (CF): Global Q2 2026 CF revenue grew 11% year-over-year, reaching an undisclosed total that contributed ~86% of Vertex's $3.3 billion total Q2 revenue. Eliftrek exceeded $1 billion in cumulative revenue in H1 2026, with strong uptake across the U.S. and Europe. U.S. CF revenue grew 9% year-over-year, while international CF revenue grew 12% year-over-year. H1 2026 global CF revenue grew 8% year-over-year. 2. Casgevi (Heme): Q2 2026 revenue was $76 million, representing 150% year-over-year growth and 75% sequential quarter-over-quarter growth. This contributed ~2.3% of total Q2 revenue. 3. Genavix (Acute Pain): Q2 2026 revenue was $50 million, representing over 300% year-over-year growth and ~70% sequential quarter-over-quarter growth. This contributed ~1.5% of total Q2 revenue. Total company Q2 2026 revenue was $3.3 billion, an increase of 12% year-over-year.

Risks & headwinds

No new material risks or operational failures were explicitly discussed in the call. Management noted that all forward-looking statements are subject to inherent risks and uncertainties that could cause actual outcomes to differ materially from current expectations, including clinical trial success, regulatory approval timelines, payer adoption and reimbursement of new products, and the completion and expected benefits of the pending Krenetics acquisition.

Analyst Q&A

• Q: What signal led the DSMB to select the 80mg dose for POVI in primary membranous nephropathy, and what bottlenecks remain for Genavix payer access? /

  A: The seamless Phase 2-3 trial had already initiated Phase 3, and the DSMB made the unblinded dose selection based on efficacy signals from the PLA2R biomarker and full safety data. The 80mg dose selection aligned with prior signals from the Ruby 2 trial. For Genavix, 260 million covered lives (180 million unrestricted) are already secured, with two additional Medicare Part D plans added effective July 1. Minor remaining work includes securing the final tranche of coverage and helping physicians navigate existing minor restrictions, with the PSP program continuing to support patient access during this process. Gross-to-net is still on track to normalize to branded oral medicine levels. (296 characters)

• Q: What clinical attributes is Vertex targeting for next-generation CF assets, and what has the company learned about Genavix use in diabetic peripheral neuropathy (DPN) to date? /

  A: Vertex is targeting improved efficacy (getting more patients to sweat chloride <30mmol/L), strong safety profiles, once daily dosing, and favorable drug-drug interaction properties for next-gen CF assets. The potential for different monitoring requirements (e.g. less liver monitoring) will depend on trial results. For Genavix, the company has been fully focused on the acute pain launch to complete reimbursement and adoption, and will share updates on DPN development, payer expectations, and clinical data plans in coming months. (301 characters)

• Q: What criteria are required for the enaxiplin Amplitude study interim analysis to support accelerated approval in AMKD? /

  A: Vertex has a pre-agreed agreement with the FDA that allows for accelerated approval based on the interim analysis primary endpoint of one-year GFR change from baseline. While the company will also evaluate proteinuria changes as a secondary endpoint, the regulatory bar for approval at this interim analysis is a positive result on the agreed one-year GFR endpoint. That outcome would allow an accelerated approval filing shortly after the early 2027 data readout. (272 characters)

• Q: How does Vertex view competitor EGFR stabilization data for IGAN, and how does this impact the POVI launch? /

  A: The competitor data showing EGFR stabilization around baseline is consistent with expectations based on their observed proteinuria reductions, and confirms the core biological principle that meaningful proteinuria reduction leads to GFR stabilization. This strengthens conviction in the POVI profile, as POVI has delivered numerically the largest proteinuria reduction (52% from baseline) among competitors, plus strong reductions in hematuria and GDIGA1, combined with differentiated patient-centric once-monthly at-home auto-injector dosing, positioning POVI well for launch. (319 characters)

• Q: What is Vertex's bar for competitive next-generation CF assets, given upcoming competitor data? /

  A: Vertex's bar is clear: with Eliftrek already getting two-thirds of all CF patients to the normal carrier sweat chloride threshold of <30mmol/L, and 75% of patients overlapping the normal carrier distribution, any competitive asset must be able to get a higher proportion of patients to <30mmol/L to be competitive. Beyond efficacy, assets must also have a strong safety profile, good drug-drug interactions, and once daily dosing to displace Eliftrek as the standard of care. (283 characters)