-First quarter 2015 total revenues of $139
million, including net product revenues of $130 million for
KALYDECO® (ivacaftor) in cystic fibrosis-
-Cash, cash equivalents and marketable
securities of approximately $1.2 billion on March 31,
2015-
Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) today
reported consolidated financial results for the quarter ended
March 31, 2015. Vertex also reiterated its financial guidance
for total 2015 KALYDECO revenues and non-GAAP operating expenses.
Key financial results include:
Three Months Ended
March 31, Increase/(Decrease)
2015 2014 $
% (in millions, except per share data)
KALYDECO product revenues, net $ 130.2 $ 99.5 $ 30.7 31 %
GAAP net loss $ (198.6 ) $ (232.5 ) $ (33.9 )
(15
)%
GAAP net loss per share $ (0.83 ) $ (1.00 ) $ (0.17 )
(17
)%
Non-GAAP net loss $ (148.4 ) $ (151.4 ) $ (3.0 )
(2
)%
Non-GAAP net loss per share $ (0.62 ) $ (0.65 ) $ (0.03 )
(5
)%
"We continue to make significant progress toward our goals of
bringing new medicines to more people with CF and positioning the
company for long-term growth," said Jeffrey Leiden, M.D., Ph.D.,
Chairman, President and Chief Executive Officer of Vertex. "The
number of people eligible for Kalydeco continues to increase with
both geographic and label expansion, and we are also preparing for
the potential launch of Orkambi, which we announced today as the
proposed tradename for the combination of lumacaftor and ivacaftor.
Our New Drug Application for Orkambi is currently under review by
the FDA, and if approved, Orkambi would be the first medicine to
treat the underlying cause of CF for eligible patients ages 12 and
older with two copies of the F508del mutation - some 8,500 people
in the U.S."
First Quarter 2015 Non-GAAP Financial
Results
The non-GAAP financial results for the first quarter 2015 and
first quarter 2014 exclude stock-based compensation expense, costs
related to the relocation of the company's corporate headquarters,
hepatitis C-related revenues and costs and other adjustments.
Total Non-GAAP Revenues: Total non-GAAP revenues for the
first quarter of 2015 were $135.4 million, including $130.2 million
in net product revenues from KALYDECO and $5.3 million from royalty
revenues.
- Net Product Revenues from
KALYDECO: Vertex's first quarter 2015 net product revenues from
KALYDECO were $130.2 million compared to $99.5 million for the
first quarter of 2014. The increased KALYDECO net product revenues,
compared to the first quarter of 2014, resulted primarily from
additional people being treated with KALYDECO in both U.S. and
ex-U.S. markets.
Non-GAAP Cost of Product Revenues and Royalty Expenses
(COR): Total combined non-GAAP COR expenses for the first
quarter of 2015 were $10.7 million, compared to $9.6 million for
the first quarter of 2014.
Non-GAAP Research and Development (R&D) Expenses and
Sales, General and Administrative (SG&A) Expenses: Total
combined non-GAAP R&D and SG&A expenses for the first
quarter of 2015 were $246.3 million, compared to $233.9 million for
the first quarter of 2014. The components include:
- R&D Expenses: Non-GAAP
R&D expenses were $177.2 million for the first quarter of 2015,
compared to $181.5 million in non-GAAP R&D expenses for the
first quarter of 2014. The R&D expenses for the first quarter
of 2015 were similar to the first quarter of 2014 as a result of
the completion of the Phase 3 program for the combination of
lumacaftor and ivacaftor in the first half of 2014, offset by
increased costs related to the initiation of the pivotal Phase 3
program for VX-661 in combination with ivacaftor in the first
quarter of 2015.
- SG&A Expenses: Non-GAAP
SG&A expenses were $69.1 million for the first quarter of 2015,
compared to $52.4 million in non-GAAP SG&A expenses for the
first quarter of 2014. This increase was primarily the result of
increased investment in global commercial support for the planned
launch of ORKAMBI™ (lumacaftor/ivacaftor).
Non-GAAP Net Loss Attributable to Vertex: Vertex's first
quarter 2015 non-GAAP net loss was $148.4 million, or $0.62 per
diluted share, compared to a non-GAAP net loss of $151.4 million,
or $0.65 per diluted share, for the first quarter of 2014. The
non-GAAP net loss for the first quarter of 2015 was similar to the
first quarter of 2014 as a result of increased KALYDECO product
revenues, offset by increased operating expenses and interest
expense.
Cash Position at March 31,
2015
As of March 31, 2015, Vertex had $1.2 billion in cash, cash
equivalents and marketable securities compared to $1.4 billion in
cash, cash equivalents and marketable securities as of
December 31, 2014. As of March 31, 2015, Vertex had $300
million outstanding from a credit agreement that provides for a
secured loan of up to $500 million.
2015 Financial Guidance
This section contains forward-looking guidance about the
financial outlook for Vertex.
Vertex today reiterated its financial guidance for total 2015
KALYDECO revenues and non-GAAP operating expenses:
- KALYDECO Net Revenues: Vertex
expects KALYDECO net revenues of $560 to $580 million for
2015.
- Non-GAAP R&D and SG&A
Expenses: Vertex expects that its combined non-GAAP R&D and
SG&A expenses in 2015 will be in the range of $1.05 to $1.10
billion.
Vertex's expected combined non-GAAP R&D and SG&A
expenses exclude stock-based compensation expense and certain other
expenses recorded in 2015.
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, non-GAAP financial
results exclude stock-based compensation expense, costs related to
the relocation of the company's corporate headquarters, hepatitis
C-related revenues and costs and other adjustments. 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 the company's
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 information.
First Quarter 2015 GAAP Financial
Results
Total Revenues: Total revenues for the first quarter of
2015 were $138.5 million compared with $118.5 million in total
revenues for the first quarter of 2014. First quarter 2015 revenues
were comprised primarily of $130.2 million in KALYDECO net product
revenues and an aggregate of $8.3 million in net product revenues
from INCIVEK, royalty revenues and collaborative revenues. For the
first quarter of 2014, Vertex reported $99.5 million in net product
revenues from KALYDECO and an aggregate of $18.9 million in net
product revenues from INCIVEK, royalty revenues and collaborative
revenues.
Operating Costs and Expenses: Total operating costs and
expenses for the first quarter of 2015 were $310.5 million,
including certain charges of $53.5 million, compared to $334.5
million for the first quarter of 2014, including certain charges of
$91.0 million. GAAP operating costs and expenses include:
- COR Expenses: COR expenses were
$12.3 million for the first quarter of 2015, including $1.6 million
of certain charges, compared to $15.5 million for the first quarter
of 2014, including $5.9 million of certain charges.
- R&D Expenses: R&D
expenses were $215.6 million for the first quarter of 2015,
including $38.4 million of certain charges, compared to $238.6
million for the first quarter of 2014, including $57.1 million of
certain charges.
- SG&A Expenses: SG&A
expenses were $85.9 million for the first quarter of 2015,
including $16.7 million of certain charges, compared to $74.2
million for the first quarter of 2014, including $21.8 million of
certain charges.
Net Loss Attributable to Vertex: Vertex's first quarter
2015 net loss was $198.6 million, or $0.83 per diluted share,
including net charges of $50.2 million. Vertex's first quarter 2014
net loss was $232.5 million, or $1.00 per diluted share, including
net charges of $81.1 million.
Vertex Pharmaceuticals Incorporated
First Quarter Results Condensed Consolidated Statements
of Operations Data
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended March 31, 2015
2014 Revenues: Product revenues, net $ 130,875 $
103,461 Royalty revenues 6,792 10,733 Collaborative revenues 842
4,257 Total revenues 138,509 118,451 Costs and
expenses: Cost of product revenues 9,381 8,572 Royalty expenses
2,926 6,904 Research and development expenses 215,599 238,617
Sales, general and administrative expenses 85,860 74,212
Restructuring (income) expenses (3,272 ) 6,188 Total costs
and expenses 310,494 334,493 Loss from operations
(171,985 ) (216,042 ) Interest expense, net (21,307 ) (15,717 )
Other (expense) income, net (5,113 ) 451 Loss from
continuing operations before provision for income taxes (198,405 )
(231,308 ) Provision for income taxes 299 803 Loss
from continuing operations (198,704 ) (232,111 ) Loss from
discontinued operations, net of tax (Note 1) — (346 ) Net
loss (198,704 ) (232,457 ) Loss attributable to noncontrolling
interest 98 — Net loss attributable to Vertex $
(198,606 ) $ (232,457 ) Amounts attributable to Vertex: Loss
from continuing operations $ (198,606 ) $ (232,111 ) Loss from
discontinued operations (Note 1) — (346 ) Net loss
attributable to Vertex $ (198,606 ) $ (232,457 ) Amounts per
share attributable to Vertex common shareholders: Net loss from
continuing operations: Basic and diluted $ (0.83 ) $ (1.00 ) Net
loss: Basic and diluted $ (0.83 ) $ (1.00 ) Shares used in per
share calculations: Basic and diluted 239,493 232,887
Reconciliation of GAAP to Non-GAAP Net Loss First Quarter
Results
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended March 31,
2015 2014 GAAP loss attributable to
Vertex $ (198,606 ) $ (232,457 ) Stock-based compensation
expense 57,384 46,580 Real estate restructuring costs (Note 2)
(3,567 ) 19,942 HCV related revenues and costs (Note 3) (4,469 )
11,216 Other adjustments (Note 4) 882 3,325
Non-GAAP net loss attributable to Vertex $ (148,376 ) $
(151,394 ) Amounts per diluted share attributable to Vertex
common shareholders: GAAP $ (0.83 ) $ (1.00 ) Non-GAAP $ (0.62 ) $
(0.65 ) Shares used in diluted per share calculations: GAAP and
Non-GAAP 239,493 232,887
Reconciliation of GAAP to
Non-GAAP Revenues and Expenses First Quarter Results
(in thousands)
(unaudited)
Three Months Ended March 31,
2015 2014 GAAP total revenues $
138,509 $ 118,451 HCV related revenues (Note 3) (2,869 ) (10,241 )
Other adjustments (Note 4) (200 ) —
Non-GAAP total
revenues $ 135,440 $ 108,210
Three Months Ended March 31, 2015 2014 GAAP
cost of product revenues and royalty expenses $ 12,307 $ 15,476
HCV related costs (Note 3) (1,596 ) (5,887 )
Non-GAAP cost of
product revenues and royalty expenses $ 10,711 $ 9,589
GAAP research and development expenses $ 215,599 $ 238,617
Stock-based compensation expense (38,217 ) (32,900 ) Real estate
restructuring costs (Note 2) — (12,201 ) HCV related costs (Note 3)
488 (8,656 ) Other adjustments (Note 4) (696 ) (3,325 )
Non-GAAP
research and development expenses $ 177,174 $ 181,535
GAAP sales, general and administrative expenses $ 85,860 $
74,212 Stock-based compensation expense (19,167 ) (13,680 ) Real
estate restructuring costs (Note 2) — (2,200 ) HCV related costs
(Note 3) 2,904 (5,921 ) Other adjustments (Note 4) (448 ) —
Non-GAAP sales, general and administrative expenses $ 69,149
$ 52,411
Combined Non-GAAP R&D and SG&A
expenses $ 246,323 $ 233,946
Three Months Ended March 31, 2015 2014 GAAP
provision for income taxes $ 299 $ 803 Other adjustments (Note
4) 63 —
Non-GAAP provision for income taxes $
362 $ 803
Condensed Consolidated Balance Sheets
Data
(in thousands)
(unaudited)
March 31, 2015
December 31, 2014 Assets Cash, cash equivalents and
marketable securities $ 1,181,134 $ 1,387,106 Accounts receivable,
net 80,332 75,964 Inventories 34,089 30,848 Other current assets
62,648 52,593 Property and equipment, net 708,616 715,812
Intangible assets 29,000 29,000 Goodwill 39,915 39,915 Other
non-current assets 30,093 3,441
Total assets $
2,165,827 $ 2,334,679
Liabilities and
Shareholders' Equity Other liabilities $ 272,977 $ 322,418
Accrued restructuring expense 21,488 45,855 Deferred revenues
39,918 45,276 Capital leases 66,143 57,099 Fan Pier lease
obligation 472,971 473,073 Senior secured term loan 294,793 294,775
Shareholders' equity 997,537 1,096,183
Total liabilities
and shareholders' equity $ 2,165,827 $ 2,334,679
Common shares outstanding 243,580 241,764
Note 1: For the three months ended March 31, 2014, the
company presents the effect of its relationship with Alios, which
it consolidated as a variable interest entity from June 2011 to
December 2013, as discontinued operations attributable to Vertex in
its condensed consolidated statements of operations.
Note 2: In the three months ended March 31, 2015, "Real
estate restructuring costs" consisted of restructuring credits of
$3.6 million primarily related to the company's relocation from
Cambridge to Boston, Massachusetts. In the three months ended March
31, 2014, "Real estate restructuring costs" consisted of (i)
transition costs related to the company's relocation that were
recorded as R&D and SG&A, and (ii) restructuring charges
related to this relocation.
Note 3: In the three months ended March 31, 2015, "HCV
related revenues and costs" consisted of (i) $0.7 million net
product revenues from INCIVEK, (ii) $1.5 million royalty revenues
from INCIVO, (iii) $0.6 million HCV collaborative revenues, (iv)
$1.6 million COR expenses, (v) R&D and SG&A credits
(including the pharma fee) and (vi) $0.2 million restructuring
expenses. In the three months ended March 31, 2014, "HCV related
revenues and costs" included in the company's loss from continuing
operations consisted of (1) $3.9 million net product revenues from
INCIVEK, (2) $4.9 million royalty revenues from INCIVO, (3) $1.4
million HCV collaborative revenues, (4) $0.7 million and $5.2
million costs of product revenues and royalty revenues related to
INCIVEK and INCIVO, respectively, (5) R&D and SG&A expenses
(including the pharma fee) and (6) $0.6 million restructuring
expenses.
Note 4: In each of the three months ended March 31, 2014
and 2015, "Other adjustments" consisted of development cost
associated with VX-509. In addition, in the three months ended
March 31, 2015, "Other adjustments" included amounts related to a
variable interest entity.
Note 5: In each of the three months ended March 31, 2014
and 2015, the company excludes from its non-GAAP loss attributable
to Vertex restructuring (income) expenses. In addition, in the
three months ended March 31, 2014 discontinued operations are
excluded from its non-GAAP loss attributable to Vertex.
INDICATION AND IMPORTANT SAFETY INFORMATION FOR
KALYDECO® (ivacaftor)
Ivacaftor is a cystic fibrosis transmembrane conductance
regulatory (CFTR) potentiator indicated for the treatment of cystic
fibrosis (CF). In the U.S. (in patients age 2 years and older) and
Europe (in patients age 6 years and older), ivacaftor is indicated
for patients who have one of the following mutations in the CFTR
gene: G551D, G1244E, G1349D, G178R, G551S, S1251N, S1255P, S549N,
or S549R. In Canada (in patients 6 years and older), ivacaftor is
indicated for patients with these same mutations and also for
patients with the G970R mutation. Additionally, in the U.S. (in
patients age 2 years and older) and Canada (in patients age 18
years and older) ivacaftor is indicated for the treatment of CF in
patients who have an R117H mutation in the CFTR gene.
Ivacaftor is available as 150 mg tablets in countries where it
is approved for patients age 6 years and older, and additionally in
the U.S. as 50 mg and 75 mg oral granules for patients age 2 to
less than 6 years.
Ivacaftor is not effective in patients with CF with 2 copies of
the F508del mutation (F508del/F508del) in the CFTR gene. The safety
and efficacy of ivacaftor in children with CF younger than 2 years
of age have not been studied. The use of ivacaftor in children
under the age of 2 years is not recommended.
High liver enzymes (transaminases; ALT and AST) have been
reported in patients with CF receiving ivacaftor. Transaminase
elevations were more common in patients with a history of
transaminase elevations or in patients who had abnormal
transaminases at baseline. It is recommended that ALT and AST be
assessed prior to initiating ivacaftor, every 3 months during the
first year of treatment, and annually thereafter. For patients with
a history of transaminase elevations, more frequent monitoring of
liver function tests should be considered. Patients who develop
increased transaminase levels should be closely monitored until the
abnormalities resolve. Dosing should be interrupted in patients
with ALT or AST of greater than 5 times the upper limit of normal.
Following resolution of transaminase elevations, consider the
benefits and risks of resuming ivacaftor dosing.
Use of ivacaftor with medicines that are strong CYP3A inducers,
such as the antibiotics rifampin and rifabutin; seizure medications
(phenobarbital, carbamazepine, or phenytoin); and the herbal
supplement St. John's wort, substantially decreases exposure of
ivacaftor and may diminish effectiveness. Therefore,
co-administration is not recommended. The dose of ivacaftor must be
adjusted when used concomitantly with strong and moderate CYP3A
inhibitors or when used in patients with moderate or severe hepatic
disease.
Cases of non-congenital lens opacities/cataracts have been
reported in pediatric patients treated with ivacaftor. Baseline and
follow-up ophthalmological examinations are recommended in
pediatric patients initiating ivacaftor treatment.
Serious adverse reactions that occurred more frequently with
ivacaftor included abdominal pain, increased liver enzymes, and low
blood sugar (hypoglycemia). The most common side effects associated
with ivacaftor include headache; upper respiratory tract infection
(common cold), including sore throat, nasal or sinus congestion,
and runny nose; stomach (abdominal) pain; diarrhea; rash; nausea;
and dizziness. These are not all the possible side effects of
ivacaftor. A list of the adverse reactions can be found in the
product labeling for each country where ivacaftor is approved.
Patients should tell their healthcare providers about any side
effect that bothers them or does not go away.
Please see KALYDECO (ivacaftor) U.S. Prescribing
Information, EU Summary of Product
Characteristics, Canadian Product Monograph, Australian
Consumer Medicine Information and Product
Information, Swiss Prescribing Information and Patient
Information, and the New Zealand
Datasheet and Consumer Medicine Information.
About Vertex
Vertex is a global biotechnology company that aims to discover,
develop and commercialize innovative medicines so people with
serious diseases can lead better lives. In addition to our clinical
development programs focused on cystic fibrosis, Vertex has more
than a dozen ongoing research programs aimed at other serious and
life-threatening diseases.
Founded in 1989 in Cambridge, Mass., Vertex today has research
and development sites and commercial offices in the United States,
Europe, Canada and Australia. For five years in a row, Science
magazine has named Vertex one of its Top Employers in the life
sciences. For additional information and the latest updates from
the company, please visit www.vrtx.com.
Special Note Regarding Forward-looking Statements
This press release contains forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995,
including, without limitation, Dr. Leiden's statements in the
second paragraph of the press release, the information provided in
the section captioned "2015 Financial Guidance," and the
information provided regarding the development and potential
regulatory approval of ORKAMBI. While Vertex believes the
forward-looking statements contained in this press release are
accurate, these forward-looking statements represent the company's
beliefs only as of the date of this press release and there are a
number of factors that could cause actual events or results to
differ materially from those indicated by such forward-looking
statements. Those risks and uncertainties include, among other
things, that the company's expectations regarding its 2015 revenues
and financial results and its 2015 non-GAAP operating expenses may
be incorrect (including because one or more of the company's
assumptions underlying its revenue or expense expectations may not
be realized), that regulatory authorities may not approve, or
approve on a timely basis, ORKAMBI, that data from the company's
development programs may not support registration or further
development of its compounds due to safety, efficacy or other
reasons, and other risks listed under Risk Factors in Vertex's
annual report and quarterly reports filed with the Securities and
Exchange Commission and available through the company's website at
www.vrtx.com. Vertex disclaims any obligation to update the
information contained in this press release as new information
becomes available.
Conference Call and
Webcast
The company will host a conference call and webcast today at
5:00 p.m. ET. To access the call, please dial (866) 501-1537 (U.S.)
or +1 (720) 545-0001 (International). The conference call will be
webcast live and a link to the webcast can be accessed through
Vertex's website at www.vrtx.com in
the "Investors" section under "Events and Presentations." To ensure
a timely connection, it is recommended that users register at least
15 minutes prior to the scheduled webcast. An archived webcast will
be available on the company's website.
(VRTX-GEN)
Vertex Contacts:Investors:Michael Partridge,
617-341-6108orKelly Lewis, 617-961-7530orEric Rojas,
617-961-7205orMedia:Zach Barber,
617-341-6992mediainfo@vrtx.com
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