Vertex Reports First Quarter 2013 Financial Results and Reviews Recent Progress in Development Progr
Vertex Reports First Quarter 2013 Financial Results and Reviews Recent Progress in Development Programs for Cystic Fibrosis and Hepatitis C
-First quarter 2013 total revenues of $328 million, including net product revenues of $206 million for INCIVEK in hepatitis C and $62 million for KALYDECO in cystic fibrosis-
-Cystic fibrosis: Enrollment ongoing in Phase 3 program for VX-809 in combination with ivacaftor for people with two copies of the F508del mutation-
-Hepatitis C: multiple all-oral combination studies ongoing with the nucleotide analogue HCV polymerase inhibitor VX-135-
CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Vertex Pharmaceuticals Incorporated (NAS: VRTX) today reported consolidated financial results for the quarter ended March 31, 2013. The company also today increased its KALYDECO net revenue guidance for 2013 and reiterated other components of financial guidance, as provided on January 29, 2013.
Vertex reported total first quarter 2013 revenues of $328 million, including net product revenues of $206 million from INCIVEK® (telaprevir) and $62 million from KALYDECOTM (ivacaftor). The GAAP net loss attributable to Vertex was $(308.0) million, or $(1.43) per share, for the first quarter of 2013. The company's first quarter 2013 GAAP net loss includes certain charges of $313.8 million, comprised primarily of a one-time charge, net of a tax benefit, of $285.3 million related to an impairment of an intangible asset. Non-GAAP net income attributable to Vertex for the first quarter of 2013 was $5.7 million, or $0.03 per diluted share. The company reported $1.24 billion in cash, cash equivalents and marketable securities as of March 31, 2013.
"During the first quarter of the year, we have made significant advances across our business aswe continue to execute on our strategy of developing new medicines focused on serious diseases in specialty markets," said Jeffrey Leiden, M.D., Ph.D., Chair, President and Chief Executive Officer of Vertex. "With the recent initiation of a Phase 3 program in cystic fibrosis, multiple ongoing all-oral studies in hepatitis C, label-expansion studies for ivacaftor, and significant advances in our early stage pipeline, we are well positioned for continued progress over the rest of this year and beyond."
Development Program Updates
Vertex's strategy in cystic fibrosis (CF) is to provide benefit to as many CF patients as possible, and to maximize the benefit for these patients, with our approved and investigational medicines.
Continued Progression of Label-Expansion Studies for Ivacaftor Monotherapy
- Three Phase 3 label-expansion studies are ongoing for ivacaftor monotherapy, including a study in people with CF ages 6 and older who have at least one copy of the R117H mutation, a study in people with CF ages 6 and older who have at least one non-G551D CFTR gating mutation and a study in children with CF ages 2 to 5 who have a gating mutation. Enrollment of the study of gating mutations is complete, with the first data expected in the second half of 2013. Enrollment is ongoing in the study of children ages 2 to 5 and in the study in people with the R117H mutation. Enrollment is also ongoing in a Phase 2 proof-of-concept study evaluating ivacaftor in people with CF who have clinical evidence of residual CFTR function. Vertex believes that ivacaftor monotherapy may be able to treat between 10% and 15% of the estimated 70,000 CF patients worldwide, pending results of clinical studies.
Initiation of Phase 3 Studies for VX-809 in Combination with Ivacaftor
- Vertex recently initiated a Phase 3 program for VX-809 in combination with ivacaftor that consists of two 24-week Phase 3 studies in people ages 12 and older with two copies of the most common mutation in the cystic fibrosis transmembrane conductance regulator (CFTR) gene, known as F508del. Enrollment in the Phase 3 program is underway. Worldwide, nearly half of people with CF have two copies of the F508del mutation. Additional details on the Phase 3 program were provided in a press release issued February 26, 2013.
Phase 2 Data for VX-661 in Combination with Ivacaftor
- Vertex recently announced data from a Phase 2 study of VX-661 in combination with ivacaftor in people with two copies of the F508del mutation. In the study, treatment with a combination of VX-661 and ivacaftor for 28 days in the two highest dose groups resulted in mean relative increases in lung function (percent predicted FEV1) of 9.0% (p=0.01) and 7.5% (p=0.02) versus placebo. In contrast, patients who received placebo showed a 0.03% mean relative change in lung function at Day 28 (within-group). In the study, VX-661 was generally well-tolerated, both as monotherapy and in combination with ivacaftor, and most adverse events were pulmonary in nature, were mild to moderate in severity and similar between the treatment groups and those who received placebo. Additional details on these data were provided in a press release issued April 18, 2013.
Vertex's strategy in hepatitis C is to develop new all-oral treatment regimens of 12 weeks or less in duration with a goal of providing a high viral cure rate and improved tolerability.
Multiple Ongoing Studies of VX-135 as Part of All-Oral Treatment Regimens
- Vertex is currently evaluating multiple all-oral regimens that include VX-135, Vertex's nucleotide analogue hepatitis C virus (HCV) polymerase inhibitor. Ongoing and planned studies include:
- Genotype 1
- Two Phase 2 studies of VX-135 in combination with ribavirin are currently ongoing in people with genotype 1 HCV infection. Vertex today announced that one of these studies is fully enrolled.
- A drug-drug interaction study of VX-135 in combination with simeprevir is ongoing in healthy volunteers. Simeprevir (TMC435) is a once-daily investigational hepatitis C protease inhibitor being jointly developed by Janssen R&D Ireland and Medivir AB.
- Genotypes 1, 2 or 3 and People with Cirrhosis
- Vertex plans to conduct two Phase 2 studies of VX-135 and Bristol-Myers Squibb's NS5A replication complex inhibitor daclatasvir. An initial study in people with genotype 1 HCV infection is planned for the second quarter of 2013. Vertex plans to begin a subsequent study in people infected with genotype 1, 2 or 3 HCV, including those with cirrhosis, in the second half of 2013, pending data from the initial study.
- Vertex expects to obtain the first data from all-oral studies of VX-135 in the second half of 2013, including data from the initial study of VX-135 with daclatasvir and from the studies of VX-135 with ribavirin.
- Genotype 1
Data for ALS-2200 (VX-135) in Genotypes 2, 3 and 4 and in People with Cirrhosis Presented at EASL
- At the 48th Annual Meeting of the European Association for the Study of the Liver (EASL), Vertex announced new data from a 7-day viral kinetic study of ALS-2200 in people with genotypes 2, 3 and 4 HCV and those with cirrhosis. The data showed significant reductions in HCV RNA after seven days of dosing with ALS-2200 (200 mg) once daily and were consistent with previously reported data in people with genotype 1 chronic HCV infection. ALS-2200 was well-tolerated in this study, there were no serious adverse events and no patients discontinued due to adverse events. Additional details on these data were provided in a press release issued April 23, 2013.
Data from CONCISE Study of Telaprevir Presented at EASL
- Also at EASL, Vertex announced new data from an interim analysis of the CONCISE study, which showed that treatment with telaprevir combination therapy for a total of 12 or 24 weeks resulted in high viral cure rates in people with genotype 1 HCV with the IL28B CC genotype who had a rapid viral response and completed at least 12 weeks of treatment. The safety profile of telaprevir combination therapy observed in the CONCISE study through the time of the interim analysis was similar to that seen in previously reported clinical trials. Additional details on these data were provided in a press release issued April 24, 2013.
Vertex's strategy in autoimmune diseases is to maximize the value of VX-509 across multiple autoimmune diseases globally. The company will evaluate collaborative opportunities that provide funding and capabilities to broaden and accelerate global development of VX-509.
Enrollment Complete in Phase 2b Study of VX-509 in Rheumatoid Arthritis
- Vertex today announced that enrollment is complete in a 24-week Phase 2b study of VX-509, a selective JAK3 inhibitor, in people with moderate to severe rheumatoid arthritis (RA) receiving methotrexate. The primary endpoints of this study will be measured after 12 weeks of treatment, and data from this analysis are expected in the second half of 2013.
First Quarter 2013 Financial Results
Total Revenues: Total revenues for the first quarter of 2013 were $328.4 million, compared with $438.7 million in total revenues for the first quarter of 2012. The components of total revenues for the first quarter of 2013 and 2012 were:
|Three Months Ended March 31,|
|Product revenues||(in millions)|
|INCIVEK revenues, net||$||205.6||$||356.9|
|KALYDECO revenues, net||61.8||18.4|
|Total product revenues, net||267.4||375.4|
|Royalty revenues from INCIVO||39.0||32.9|
|Other royalty revenues||4.6||6.0|
|Total royalty revenues||43.6||39.0|
A table of the components of total revenues for the first quarter of 2013 and each quarter in 2012 is provided following the Condensed Consolidated Statements of Operations Data.
- Net Product Revenues from INCIVEK
Vertex's first quarter 2013 net product revenues from INCIVEK were $205.6 million, compared to $356.9 million for the first quarter of 2012. The reduced revenues from INCIVEK were due to fewer HCV patients initiating treatment in the first quarter of 2013 compared to the first quarter of 2012.
- Net Product Revenues from KALYDECO
Vertex's first quarter 2013 net product revenues from KALYDECO were $61.8 million, compared to $18.4 million for the first quarter of 2012. The increased revenues, compared to the first quarter of 2012, resulted primarily from the rapid uptake of KALYDECO in the vast majority of eligible patients in the U.S. following FDA approval in January 2012.
- Royalty Revenues from INCIVO®
Vertex recognized $39.0 million in INCIVO royalty revenues for the first quarter of 2013 from our collaborator Janssen, compared to $32.9 million in INCIVO royalty revenues for the first quarter of 2012. The increase in INCIVO royalties was due to expanded availability of INCIVO in international markets.
Cost of Product Revenues: Cost of product revenues was $31.0 million for the first quarter of 2013, compared to cost of product revenues of $25.9 million for the first quarter of 2012. The increase in cost of product revenues was due to a $9.3 million commercial milestone related to net sales of KALYDECO under our agreement with Cystic Fibrosis Foundation Therapeutics, Inc. (CFFT).
Research and Development (R&D) Expenses: R&D expenses were $218.1 million for the first quarter of 2013, including $23.3 million of Vertex stock-based compensation expense and Alios expenses related to the accounting for the collaboration with Vertex, compared to $196.4 million for the first quarter of 2012, including $21.1 million of Vertex stock-based compensation expense and Alios expenses related to the accounting for the collaboration with Vertex. The increase in Vertex's R&D investment is principally due to progression and expansion of clinical development programs in cystic fibrosis, hepatitis C and rheumatoid arthritis, including initiation of a pivotal program for a combination of VX-809 and ivacaftor and advancement of all-oral studies for VX-135.
Sales, General and Administrative (SG&A) Expenses: SG&A expenses were $92.9 million for the first quarter of 2013, including $13.1 million of Vertex stock-based compensation expense and Alios expenses related to the accounting for the collaboration with Vertex, compared to $111.1 million for the first quarter of 2012, including $11.6 million of Vertex stock-based compensation expense and Alios expenses related to the accounting for the collaboration with Vertex. This decrease in SG&A expenses resulted primarily from reduced HCV marketing and commercial expenses.
GAAP Net Income (Loss) Attributable to Vertex: Vertex's first quarter 2013 GAAP net loss was $(308.0) million, or $(1.43) per share. The company's first quarter 2013 GAAP net loss includes certain charges of $313.8 million, comprised primarily of a one-time charge of $412.9 million, which was partially offset by a tax benefit of $127.6 million, related to an impairment of an intangible hepatitis C asset (VX-222). Vertex's GAAP net income for the first quarter of 2012 was $91.6 million, or $0.43 per diluted share, including $27.0 million in certain charges.
Non-GAAP Net Income Attributable to Vertex: Vertex's first quarter 2013 non-GAAP net income was $5.7 million, or $0.03 per diluted share. Vertex's non-GAAP net income for the first quarter of 2012 was $118.6 million, or $0.55 per diluted share. The decrease in the company's first quarter 2013 non-GAAP net income, compared to the first quarter of 2012, is primarily attributable to a decrease in total revenues, specifically decreased INCIVEK revenues due to fewer HCV patients initiating treatment. Total non-GAAP operating expenses for the first quarter of 2013 were consistent with the first quarter of 2012.
Cash Position: As of March 31, 2013, Vertex had $1.24 billion in cash, cash equivalents and marketable securities compared to $1.32 billion in cash, cash equivalents and marketable securities as of December 31, 2012.
Convertible Debt: As of March 31, 2013, Vertex had $400.0 million in convertible debt due in October 2015. The conversion price of the debt is $48.83 per share and is callable on or after October 1, 2013. Vertex holds a provisional redemption option that allows the debt to be called prior to October 1, 2013 if the closing price of Vertex shares is above $63.48 per share for 20 of 30 consecutive trading days.
2013 Financial Guidance
This section contains forward-looking guidance about the financial outlook for Vertex Pharmaceuticals.
Vertex today updated its financial guidance for full-year 2013 KALYDECO net revenues. The company now expects full-year 2013 KALYDECO net revenues to be in the range of $300 million to $340 million. The prior range, provided on January 29, 2013, was for full-year 2013 KALYDECO net revenues to be in the range of $280 million to $320 million.
The company today reiterated its financial guidance for total 2013 revenues to be in the range of $1.10 billion to $1.25 billion. The company also reiterated its guidance for total 2013 non-GAAP operating expenses, excluding cost of revenues, stock-based compensation expense, intangible asset impairment charges and Alios expenses related to the accounting for the collaboration with Vertex, of $1.09 billion to $1.15 billion, including full-year 2013 R&D expenses of $750 million to $790 million and full-year 2013 SG&A expenses of $340 million to $360 million.
Non-GAAP Financial Measures
In this press release, Vertex's financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. In particular, Vertex provides its first quarter 2013 and 2012 non-GAAP net income excluding stock-based compensation expense, restructuring expense, intangible asset impairment charges, net of tax, and charges related to changes in the fair value of expected future payments under Vertex's collaboration with Alios. These results are provided as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help indicate underlying trends in the company's business, are important in comparing current results with prior period results and provide additional information regarding its financial position. Management also uses these non-GAAP financial measures to establish budgets and operational goals that are communicated internally and externally, and to manage the company's business and to evaluate its performance. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached financial statements.
|Vertex Pharmaceuticals Incorporated|
|First Quarter Results|
|Condensed Consolidated Statements of Operations Data|
|(in thousands, except per share amounts)|
|Three Months Ended|
|Product revenues, net||$||267,381||$||375,375|
|Costs and expenses:|
|Cost of product revenues||30,955||25,918|
|Research and development expenses (R&D)||218,095||196,371|
|Sales, general and administrative expenses (SG&A)||92,879||111,146|
Intangible asset impairment charge (Note 1)
|Total costs and expenses||766,656||347,088|
|Income (loss) from operations||(438,288||)||91,649|
|Other income (expense), net||(4,652||)||(3,741||)|
|Income (loss) before provision for (benefit from) income taxes||(442,940||)||87,908|
|Provision for (benefit from) income taxes (Note 1)||(130,313||)||32|
|Net income (loss)||(312,627||)||87,876|
|Net loss attributable to noncontrolling interest (Note 2)||4,611||3,714|
|Net income (loss) attributable to Vertex||$||(308,016||)||$||91,590|
|Net income (loss) per share attributable to Vertex common shareholders:|
|Shares used in per share calculations:|
|Three Months Ended|
|INCIVEK revenues, net||$||205.6||$||222.8||$||254.3||$||327.7||$||356.9|
|KALYDECO revenues, net||61.8||58.5||49.2||45.5||18.4|
|Total product revenues, net||267.4||281.3||303.5||373.3||375.4|
|Royalty revenues from INCIVO||39.0||36.8||20.0||28.0||32.9|
|Other royalty revenues||4.6||6.7||5.6||5.5||6.0|
|Total royalty revenues||43.6||43.5||25.6||33.5||39.0|
|Reconciliation of GAAP to Non-GAAP Financial Information-First Quarter|
|(in thousands, except per share amounts)|
|Three Months Ended March 31, 2013||Adjustments|
|Income (loss) from operations||$||(438,288||)||$||5,289||$||31,152||$||412,900||$||39||$||11,092|
|Other income (expense), net||(4,652||)||8||—||—||—||(4,644||)|
|Income (loss) before provision for (benefit from) income taxes||(442,940||)||5,297||31,152||412,900||39||6,448|
|Provision for (benefit from) income taxes||(130,313||)||3,426||—||127,586||—||699|
|Net income (loss)||(312,627||)||1,871||31,152||285,314||39||5,749|
|Net loss (income) attributable to noncontrolling interest (Alios)||4,611||(4,611||)||—||—||—||—|
|Net income (loss) attributable to Vertex||$||(308,016||)||$||(2,740||)||$||31,152||$||285,314||
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