-Third-quarter 2018 total CF product revenues
of $783 million, a 42% increase compared to $550 million in the
third quarter of 2017-
-Company reiterates full-year 2018 total CF
product revenue guidance of $2.9 to $3.0 billion; reiterates
full-year 2018 combined non-GAAP R&D and SG&A expense
guidance of $1.50 to $1.55 billion-
Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) today
reported consolidated financial results for the third quarter ended
September 30, 2018 and reviewed recent progress with its approved
and investigational medicines. Vertex also reiterated its guidance
for full-year 2018 total CF product revenues and guidance for
combined GAAP and non-GAAP R&D and SG&A expenses.
Third-Quarter
2018 Financial Highlights
Three Months Ended September 30,
2018
2017
% Change (in millions, except per share and percentage data)
TOTAL CF product revenues, net $ 783 $ 550 42 %
GAAP net income (loss) $ 129 $ (103 )
GAAP net income
(loss) per share - diluted $ 0.50 $ (0.41 )
Non-GAAP
net income $ 282 $ 136 107 %
Non-GAAP net income per share -
diluted $ 1.09 $ 0.53 106 %
"We continue to make significant progress toward our goal of
developing medicines for all people with CF as marked by the recent
approvals of KALYDECO and ORKAMBI in younger children, the launch
of SYMDEKO in the U.S. and the rapid progress we have made with our
triple combination pivotal studies," said Jeffrey Leiden, M.D.,
Ph.D., Chairman, President and Chief Executive Officer of Vertex.
"In our development pipeline, we are advancing potential medicines
for pain, sickle cell disease and beta thalassemia and are also
beginning to advance additional compounds from research into early
clinical development that could fundamentally change the treatment
of other serious diseases in the future."
Dr. Leiden continued, "Our ability to treat more and more people
with CF is driving revenue and earnings growth and significant cash
flow generation, which enables the company to invest to discover
and develop transformative future medicines for the treatment of CF
and other life-threatening diseases."
Third-Quarter
2018 CF Net Product Revenues
Three Months Ended September 30, 2018
2017 (in millions)
TOTAL CF product
revenues, net $ 783 $ 550
KALYDECO product revenues,
net $ 246 $ 213
ORKAMBI product revenues, net $ 282 $
336
SYMDEKO product revenues, net $ 255 $ —
Total CF net product revenues increased 42% compared to
the third quarter of 2017, primarily driven by the rapid uptake of
SYMDEKO in the U.S. across all eligible patients.
Third-Quarter
2018 R&D and SG&A Expenses
Three Months Ended September 30, 2018
2017 (in millions)
Combined GAAP R&D
and SG&A expenses $ 468 $ 576 *
GAAP R&D
expense $ 331 $ 455 *
GAAP SG&A expense $ 137 $ 121
Combined Non-GAAP R&D and SG&A expenses $ 379
$ 334
Non-GAAP R&D expense $ 274 $ 243
Non-GAAP SG&A expense $ 105 $ 91
* The third quarter of 2017 includes a $160M upfront payment to
Concert Pharmaceuticals for VX-561.
Combined non-GAAP R&D and SG&A expenses increased
compared to the third quarter of 2017 due to the advancement of the
company's portfolio of triple combination regimens for CF and
investments to support the treatment of CF globally.
Combined GAAP R&D and SG&A expenses decreased
compared to the third quarter of 2017 due to an upfront payment of
$160.0 million related to the acquisition of VX-561, an
investigational once-daily CFTR potentiator, from Concert
Pharmaceuticals in the third quarter of 2017, partially offset by
expenses related to the advancement of the company's portfolio of
triple combination regimens for CF and investments to support the
treatment of CF globally.
Third-Quarter 2018 Net Income and Cash
Position
Non-GAAP net income increased 107% compared to the third
quarter of 2017 largely driven by the strong growth in total CF
product revenues.
GAAP net income increased compared to the third quarter
of 2017 largely driven by the strong growth in total CF product
revenues and by a reduction to research and development expenses
due to the $160.0 million payment to Concert in the third quarter
of 2017.
Cash, cash equivalents and marketable securities as of
September 30, 2018 were approximately $3.1 billion, an increase of
approximately $1.0 billion compared to $2.1 billion as of December
31, 2017.
2018 Financial Guidance
Vertex today reiterated its full-year 2018 total CF product
revenue guidance and guidance for combined GAAP and non-GAAP
R&D and SG&A expenses as summarized below:
Current FY 2018 TOTAL CF
product revenues $ 2.9 - 3.0 billion Unchanged
Combined GAAP R&D and SG&A expenses $ 1.80 - 1.95
billion Unchanged
Combined Non-GAAP R&D and SG&A
expenses $ 1.50 - 1.55 billion Unchanged
"We have created a strong financial profile for our business and
are poised for continued growth as we make progress developing
medicines for many more people with CF," said Ian Smith, Executive
Vice President and Chief Operating Officer. "Nearer term, we
anticipate revenue growth in 2019 will be driven by the impact of
the SYMDEKO and SYMKEVI launches and recently completed
reimbursement agreements and label expansions for our CF medicines.
The potential for additional revenue growth in 2019 will be
dependent upon gaining new reimbursement agreements in key
countries, including the UK and France. Continued growth beyond
2019 will be driven by the potential approval, reimbursement and
uptake of a triple combination medicine for the large number of
patients with a minimal function mutation who currently do not have
a treatment for the cause of their CF."
Business Highlights
TRIPLE COMBINATION REGIMENS
Bringing triple combination regimens to people with CF as
quickly as possible
- Data are expected in late 2018 for the
two Phase 3 studies of VX-659 in triple combination with tezacaftor
and ivacaftor in people with CF who have one F508del mutation and
one minimal function mutation and in people who have two F508del
mutations.
- Enrollment is expected to be complete
in the fourth quarter of 2018 for the two Phase 3 studies of VX-445
in triple combination with tezacaftor and ivacaftor in people with
CF who have one F508del mutation and one minimal function mutation
and in people who have two F508del mutations. The company plans to
report data from these studies in the first quarter of 2019.
- Vertex plans to evaluate data from both
the VX-659 and VX-445 Phase 3 triple combination programs to choose
the best regimen to submit for potential regulatory approval.
Together these data are expected to provide the basis for
submission of a New Drug Application (NDA) to the U.S. Food and
Drug Administration (FDA) for people who have one F508del mutation
and one minimal function mutation no later than mid-2019.
Evaluating VX-659 and VX-445 in children
- Studies are underway to evaluate both
the VX-659 and VX-445 triple combination regimens in children with
CF ages 6 through 11 who have one F508del mutation and one minimal
function mutation and in children who have two F508del mutations.
These studies are intended to support potential approval of a
triple combination regimen in children ages 6 through 11.
Potential once-daily regimens
- In early 2018, the company reported
positive safety and efficacy results for the once-daily potentiator
VX-561 when dosed as part of a triple combination regimen including
VX-659 or VX-445 and tezacaftor. The once-daily triple combination
regimens were generally well tolerated, and the majority of adverse
events were mild to moderate.
- Based on recent feedback from the FDA,
Vertex plans to initiate a Phase 2 study in the first half of 2019
evaluating VX-561 as a monotherapy in people with CF who have a
gating mutation.
SYMKEVI in the European Union
- On July 27, 2018, Vertex announced that
the European Medicines Agency (EMA) Committee for Medicinal
Products for Human Use (CHMP) adopted a positive opinion for
SYMKEVI (tezacaftor/ivacaftor) in a combination regimen with
ivacaftor (KALYDECO) for the treatment of people with CF ages 12
and older who either have two copies of the F508del mutation or who
have one copy of the F508del mutation and a copy of one of the
following 14 mutations in which the CFTR protein shows residual
activity: P67L, R117C, L206W, R352Q, A455E, D579G, 711+3A→G, S945L,
S977F, R1070W, D1152H, 2789+5G→A, 3272-26A→G, and
3849+10kbC→T.
- Approval for SYMKEVI in the European
Union (EU) is expected in the fourth quarter of 2018.
APPROVED CF MEDICINES
Establishing long-term reimbursement outside of the
U.S.
- On October 1, 2018, Vertex announced
that it had entered into an innovative access contract with the
Danish pharmaceutical and procurement organization, Amgros. This
agreement provides eligible Danish CF patients access to all of
Vertex's current and future CF medicines. An agreement in Austria
was also recently secured to provide access to ORKAMBI for all
people with CF ages 6 through 11 who have two copies of the F508del
mutation.
- In September 2018, Vertex announced a
reimbursement agreement in Australia for the use of ORKAMBI in
people with CF ages 6 and older who have two copies of F508del
mutation. A pathway to access for future Vertex CF medicine,
tezacaftor/ivacaftor, was also established as part of this
process.
Treating patients at younger ages with CFTR modulators:
The company continues to make significant progress toward gaining
approval for its CF medicines to be used earlier in the course of
disease progression. Recent highlights include:
- Vertex plans to submit a supplemental
New Drug Application (sNDA) to the FDA in late 2018 based on
positive data from a recently completed 24-week single-arm Phase 3
safety study of tezacaftor/ivacaftor in 70 children ages 6
through 11 who have two copies of the F508del mutation or who have
one copy of the F508del mutation and one residual function
mutation. The primary endpoint of the study was safety. The study
met its primary safety endpoint, and safety data from the study
showed that the treatment was generally well tolerated and safety
data were consistent with those seen in previous Phase 3 studies of
tezacaftor/ivacaftor in children ages 12 and older. To support
approval in the EU, an eight-week, double-blind, placebo-controlled
Phase 3 efficacy study is ongoing to evaluate tezacaftor/ivacaftor
in approximately 65 children ages 6 through 11. The primary
endpoint of this study is the absolute change in lung clearance
index.
- KALYDECO was approved in August
2018 in the U.S. for children with CF ages 12 to <24 months. On
October 19, 2018, Vertex announced that it received a positive
opinion from the European CHMP for KALYDECO in this age group. The
company expects a decision in the EU in late 2018.
- On October 18, 2018, Vertex announced
positive data from a Phase 3 study evaluating ivacaftor in
infants ages 6 to <12 months. These are the first data to
demonstrate the potential to treat the underlying cause of CF in
patients as young as six months old. The company plans to submit an
sNDA to the FDA and a line extension to the EMA in late 2018.
- ORKAMBI was approved in August
2018 in the U.S. for children with CF ages 2 to 5 years old. A line
extension has been submitted to the EMA with a decision anticipated
in the first half of 2019.
- Dosing is underway in Phase 3 study
evaluating lumacaftor/ivacaftor in children ages 12 to
<24 months.
LATE-STAGE RESEARCH & CLINICAL DEVELOPMENT
Vertex continues to invest to discover and develop
transformative medicines in other serious diseases. The company has
a portfolio of potential medicines across a range of diseases,
including:
Sickle Cell Disease & β-Thalassemia: Vertex and its
partner CRISPR Therapeutics are developing the autologous
gene-edited hematopoietic stem cell therapy CTX001 for the
treatment of β-thalassemia and sickle cell disease.
- In the U.S., Vertex and CRISPR
Therapeutics recently announced that the FDA lifted the clinical
hold on the CTX001 Investigational New Drug application (IND) for
the treatment of sickle cell disease that was submitted earlier
this year. The companies previously received regulatory approval to
conduct a Phase 1/2 study in multiple countries in Europe and
Canada. Vertex and CRISPR plan to initiate the study in sickle cell
disease by the end of 2018. The first two patients in the study
will be dosed sequentially and, pending data from these initial two
patients, subsequent patients can be dosed concurrently.
- Enrollment for a Phase 1/2 study in
people with β-thalassemia is currently open at multiple clinical
trial sites in Europe, and the first patient has now enrolled in
this study. The Phase 1/2 trial is designed to assess safety and
efficacy in adult transfusion-dependent non-beta zero/beta zero
β-thalassemia patients. Similar to the study in sickle cell
disease, the first two patients in the study will be dosed
sequentially and, pending data from these initial two patients,
subsequent patients can be dosed concurrently. This study is
designed to enroll up to 45 patients.
Pain: Potential Role of Nav1.8 Inhibition
- The company is planning to initiate a
Phase 2b dose-ranging study evaluating the Nav1.8 inhibitor VX-150
using an oral formulation in patients with acute pain following
bunionectomy surgery. The study is designed to evaluate multiple
oral doses of VX-150 to potentially support pivotal development in
acute pain.
- Enrollment is complete in a Phase 2
proof-of-concept study evaluating VX-150 for the treatment of pain
caused by small fiber neuropathy, and data are expected in early
2019.
- Vertex continues to invest to discover
other potential pain molecules that target the sodium channel 1.8
(Nav1.8) and other new mechanisms.
Alpha-1 Antitrypsin Deficiency (AAT)
- Vertex has advanced multiple small
molecule correctors of AAT through preclinical development and is
preparing to initiate clinical development for the first of these
potential medicines by the end of 2018. AAT is a genetic disorder
that is caused by mutations in a single gene that result in
life-shortening systemic complications, primarily in the lung and
liver.
Acute Spinal Cord Injury
- In October 2014, VRTX in-licensed
VX-210 (Cethrin) from BioAxone BioSciences, Inc. as a potential new
treatment for spinal cord injury. An interim analysis of a Phase 2b
study evaluating VX-210 in patients with certain acute cervical
spinal cord injuries was recently conducted and based on the
available data, the study's Data Safety Monitoring Board (DSMB)
recommended to stop the study early due to futility. There were no
safety concerns noted in the DSMB's review of the data. Based on
the DSMB's recommendation and Vertex's review of the data, the
company has decided to stop all development of VX-210, and will
terminate the Phase 2b study. Vertex will discuss with BioAxone the
next steps for the program.
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 and guidance exclude from Vertex's pre-tax net income
(loss) (i) stock-based compensation expense, (ii) revenues and
expenses related to business development transactions including
collaboration agreements, asset acquisitions and consolidated
variable interest entities, which included an asset impairment
charge and the effects of the deconsolidation of a variable
interest entity in 2017 and (iii) other adjustments, including
gains or losses related to the fair value of the company's
strategic investment in CRISPR. The company's non-GAAP financial
results also exclude from its provision for or benefit from income
taxes (i) the estimated tax impact related to its non-GAAP
adjustments to pre-tax net income (loss) described above as well as
(ii) non-operating tax adjustments, which are not associated with
Vertex's normal, recurring operations. 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. The company adjusts, where appropriate, for both
revenues and expenses in order to reflect the company's operations.
The company provides guidance regarding product revenues in
accordance with GAAP and provides guidance regarding combined
research and development and sales, general, and administrative
expenses on both a GAAP and a non-GAAP basis. The guidance
regarding GAAP research and development expenses and sales, general
and administrative expenses does not include estimates regarding
expenses associated with any potential future business development
activities. A reconciliation of the GAAP financial results to
non-GAAP financial results is included in the attached financial
information.
Vertex Pharmaceuticals
IncorporatedThird-Quarter ResultsConsolidated
Statements of Operations Data(in thousands, except per share
amounts)(unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018
2017 Revenues: Product revenues, net $ 782,511 $ 549,642 $
2,170,152 $ 1,544,252 Royalty revenues 1,238 2,231 3,679 6,643
Collaborative revenues (Note 1) 786 26,292 3,660
286,123 Total revenues 784,535 578,165 2,177,491
1,837,018 Costs and expenses: Cost of sales 111,255 72,874 287,250
191,067 Research and development expenses (Note 2) 330,510 454,947
978,595 1,017,961 Sales, general and administrative expenses
137,295 120,710 404,406 361,285 Restructuring (income) expenses
(174 ) 337 (188 ) 13,859 Intangible asset impairment charge (Note
3) — 255,340 — 255,340 Total costs and
expenses 578,886 904,208 1,670,063 1,839,512
Income (loss) from operations 205,649 (326,043 ) 507,428
(2,494 ) Interest expense, net (8,143 ) (13,574 ) (29,346 ) (45,003
) Other (expense) income, net (Note 3)(Note 4) (60,995 ) (77,553 )
89,662 (80,634 ) Income (loss) from operations before
provision for (benefit from) income taxes 136,511 (417,170 )
567,744 (128,131 ) Provision for (benefit from) income taxes (Note
3)(Note 5) 8,055 (125,903 ) 5,737 (117,581 ) Net
income (loss) 128,456 (291,267 ) 562,007 (10,550 ) Loss (income)
attributable to noncontrolling interest (Note 3) 290 188,315
(15,638 ) 173,350 Net income (loss) attributable to
Vertex $ 128,746 $ (102,952 ) $ 546,369 $ 162,800
Amounts per share attributable to Vertex common
shareholders: Net income (loss): Basic $ 0.51 $ (0.41 ) $ 2.15 $
0.66 Diluted $ 0.50 $ (0.41 ) $ 2.11 $ 0.64 Shares used in per
share calculations: Basic 254,905 250,268 254,096 247,963 Diluted
259,788 250,268 258,972 252,095
Reconciliation of GAAP to Non-GAAP Net
IncomeThird-Quarter Results(in thousands, except per
share amounts)(unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018
2017 GAAP net income (loss) attributable to Vertex $
128,746 $ (102,952 ) $ 546,369 $ 162,800 Stock-based compensation
expense 85,532 73,770 246,104 215,334 Collaborative and transaction
revenues and expenses (Note 6) 1,979 164,819 27,877 (57,430 ) Other
adjustments (Note 7) 62,557 770 (84,697 ) 16,006
Total non-GAAP adjustments to pre-tax net income (loss)
attributable to Vertex 150,068 239,359 189,284 173,910
Non-operating tax adjustments (Note 8) 3,114 —
(13,715 ) —
Non-GAAP net income attributable to
Vertex $ 281,928 $ 136,407 $ 721,938 $
336,710 Amounts per diluted share attributable to
Vertex common shareholders: GAAP $ 0.50 $ (0.41 ) $ 2.11 $ 0.64
Non-GAAP $ 1.09 $ 0.53 $ 2.79 $ 1.33 Shares used in diluted per
share calculations: GAAP 259,788 250,268 258,972 252,095 Non-GAAP
259,788 255,792 258,972 252,095
Reconciliation of GAAP to Non-GAAP
Revenues and ExpensesThird-Quarter Results(in
thousands)(unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018
2017 GAAP total revenues $ 784,535 $ 578,165 $
2,177,491 $ 1,837,018 Collaborative and transaction revenues (Note
6) (680 ) (26,291 ) (3,540 ) (285,975 )
Non-GAAP total
revenues $ 783,855 $ 551,874 $ 2,173,951 $
1,551,043
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018 2017 GAAP cost of
sales $ 111,255 $ 72,874 $ 287,250 $ 191,067 Stock-based
compensation expense (Note 9) (1,259 ) — (3,263 ) —
Non-GAAP cost of sales $ 109,996 $ 72,874 $ 283,987 $
191,067
GAAP research and development expenses $
330,510 $ 454,947 $ 978,595 $ 1,017,961 Stock-based compensation
expense (52,918 ) (46,186 ) (153,018 ) (134,855 ) Collaborative and
transaction expenses (Note 6) (2,619 ) (165,413 ) (8,079 ) (172,446
) Other adjustments (Note 7) (1,388 ) (136 ) (3,128 ) (408 )
Non-GAAP research and development expenses $ 273,585 $
243,212 $ 814,370 $ 710,252
GAAP sales, general and
administrative expenses $ 137,295 $ 120,710 $ 404,406 $ 361,285
Stock-based compensation expense (31,355 ) (27,584 ) (89,823 )
(80,479 ) Collaborative and transaction expenses (Note 6) (289 )
(2,272 ) (1,704 ) (9,260 ) Other adjustments (Note 7) (184 ) (297 )
(580 ) (1,739 )
Non-GAAP sales, general and administrative
expenses $ 105,467 $ 90,557 $ 312,299 $
269,807
Combined non-GAAP R&D and SG&A
expenses $ 379,052 $ 333,769 $ 1,126,669 $
980,059
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018 2017 GAAP interest
expense, net and other income (expense), net $ (69,138 ) $
(91,127 ) $ 60,316 $ (125,637 ) Collaborative and transaction
expenses (Note 6) (38 ) 76,581 (72 ) 76,507 Other adjustments (Note
7) 61,159 — (88,217 ) —
Non-GAAP interest
expense, net and other income (expense), net $ (8,017 ) $
(14,546 ) $ (27,973 ) $ (49,130 )
GAAP provision for
(benefit from) income taxes $ 8,055 $ (125,903 ) $ 5,737 $
(117,581 ) Estimated income taxes related to non-GAAP adjustments
to pre-tax income (loss) (Note 10) (79 ) 120,181 (6,068 ) 111,658
Non-operating tax adjustments (Note 8) (3,114 ) — 13,715
—
Non-GAAP provision for (benefit from) income
taxes (Note 5) $ 4,862 $ (5,722 ) $ 13,384 $ (5,923 )
Condensed Consolidated Balance Sheets
Data(in thousands)(unaudited)
September 30, 2018 December
31, 2017 Assets Cash, cash equivalents and marketable
securities $ 3,055,885 $ 2,088,666 Accounts receivable, net 379,755
281,343 Inventories 124,150 111,830 Property and equipment, net
808,352 789,437 Intangible assets and goodwill 79,384 79,384 Other
assets 173,314 195,354
Total assets $ 4,620,840
$ 3,546,014
Liabilities and Shareholders'
Equity Accounts payable and accruals $ 596,389 $ 517,955 Other
liabilities 514,813 415,501 Deferred tax liability 9,414 6,341
Construction financing lease obligation 565,743 563,911
Shareholders' equity 2,934,481 2,042,306
Total
liabilities and shareholders' equity $ 4,620,840 $
3,546,014 Common shares outstanding 255,611 253,253
Note 1: In the nine months ended September 30, 2017,
collaborative revenues were primarily attributable to a $230.0
million upfront payment earned from the company's collaboration
with Merck KGaA, Darmstadt, Germany. During the three and nine
months ended September 30, 2017, collaborative revenues also
include $20.0 million and $40.0 million, respectively, that Parion
Sciences Inc., a company that Vertex consolidated as a variable
interest entity ("VIE") during the first three quarters of 2017,
earned from a collaboration agreement with a third party.
Note 2: In July 2017, the company completed the
acquisition of VX-561 (formerly CTP-656) from Concert
Pharmaceuticals, Inc. The company paid Concert $160.0 million in
cash to acquire VX-561, which was recorded as a research and
development expense in the three and nine months ended September
30, 2017.
Note 3: The company consolidates the financial statements
of one of its collaborators, BioAxone Biosciences, Inc. during the
three and nine months ended September 30, 2018 and 2017. BioAxone
is consolidated because Vertex has licensed the rights to develop
its most significant intellectual property asset. Each reporting
period Vertex estimates the fair value of the contingent payments
payable by Vertex to BioAxone. Any increase in the fair value of
these contingent payments results in a decrease in net income
attributable to Vertex on a dollar-for-dollar basis. The fair value
of contingent payments is evaluated each quarter and any change in
the fair value is reflected in the company's statement of
operations.
Vertex also consolidated Parion during the first three quarters
of 2017. In the third quarter of 2017, the company determined that
the value of Parion’s pulmonary ENaC platform had become impaired
and that the fair value of the intangible asset was zero as of
September 30, 2017. Accordingly, an impairment charge of $255.3
million and a benefit from income taxes of $126.2 million resulting
from this charge and subsequent deconsolidation of Parion
attributable to noncontrolling interest was recorded in the third
quarter of 2017. The total impact of this transaction on a GAAP
basis was a $198.7 million loss attributable to noncontrolling
interest and a $7.1 million loss attributable to Vertex and had no
impact on Vertex’s non-GAAP net income in the third quarter of
2017.
Note 4: In accordance with ASU No. 2016-01, Recognition
and Measurement of Financial Assets and Financial Liabilities,
which became effective on January 1, 2018, the company recorded a
loss of $61.2 million in the three months ended September 30, 2018
and a net gain of $85.3 million in the nine months ended September
30, 2018 to "Other income (expense), net", related to changes in
the fair value of the company's investment in CRISPR Therapeutics
AG. Prior to the adoption of ASU 2016-01, changes in the fair value
of the company's investment in CRISPR were recorded to equity on
the company's condensed consolidated balance sheets until the
related gains and losses were realized; therefore, there was no
comparable income in the three and nine months ended September 30,
2017.
Note 5: The company continues to maintain a valuation
allowance on the majority of its net operating losses and other
deferred tax assets. Due to this valuation allowance, the company
did not record a significant provision for income taxes in the
three and nine months ended September 30, 2018 and 2017. The
company is profitable from a U.S. federal income tax perspective
and has used a portion of its net operating losses to offset this
income since becoming profitable. The company may release all or a
portion of the valuation allowance in the near-term; however, the
release of the valuation allowance, as well as the exact timing and
amount of such release, continue to be subject to, among other
things, the company's level of profitability, revenue growth,
clinical program progression and expectations regarding future
profitability. In the period of the release of the valuation
allowance, the company will recognize a significant non-cash credit
to net income and will reflect a deferred tax asset, which is
currently subject to the valuation allowance, on its condensed
consolidated balance sheet. Following the release, the company
expects to continue to utilize its net operating losses to offset
income, but would begin recording a provision for income taxes
reflecting the utilization of the deferred tax assets. As of
December 31, 2017, the company's U.S. federal net operating loss
carry forwards totaled approximately $3.6 billion and its total
deferred tax asset balance subject to the valuation allowance was
approximately $1.6 billion.
Note 6: In the three and nine months ended September 30,
2018 and 2017, "Collaborative and transaction revenues and
expenses" primarily consisted of (i) revenues and operating costs
and expenses attributable to BioAxone and Parion, (ii) changes in
the fair value of contingent milestone payments and royalties
payable by Vertex to BioAxone and Parion, and (iii) collaboration
revenues and payments. "Collaborative and transaction revenues and
expenses" in the nine months ended September 30, 2018 primarily
included a $23.1 million increase in the fair value of contingent
payments payable by Vertex to BioAxone. "Collaborative and
transaction revenues and expenses" in the three and nine months
ended September 30, 2017 primarily related to (i) the $160.0
million Concert payment described in Note 1, (ii) net credits of
$3.7 million and $237.2 million, respectively, associated with the
company's oncology program, which included the $230.0 million
upfront payment described in Note 1 in the nine months ended
September 30, 2017, and (iii) a loss of $7.1 million related to the
deconsolidation of Parion noted in Note 3.
Note 7: In the three and nine months ended September 30,
2018, "Other adjustments" primarily consisted of the changes in the
fair value of the company's investment in CRISPR Therapeutics AG
described in Note 4. In the three and nine months ended September
30, 2017, "Other adjustments" primarily consisted of restructuring
charges related to the company's decision to consolidate its
research activities into its Boston, Milton Park and San Diego
locations and to close its research site in Canada.
Note 8: In the three and nine months ended September 30,
2018, "Non-operating tax adjustments" included discrete items
related to stock-based compensation. On a GAAP basis, the company
recorded a provision for income taxes related to stock-based
compensation of $3.1 million in the three months ended September
30, 2018 and a net benefit from income taxes related to stock-based
compensation of $13.7 million in the nine months ended September
30, 2018. The company expects the net benefit from income taxes for
the nine months ended September 30, 2018 to reverse in the fourth
quarter of 2018 resulting in no effect on its GAAP annual provision
for income taxes. Accordingly, the company is excluding these
adjustments from its Non-GAAP measures.
Note 9: In the three and nine months ended September 30,
2018, "Cost of sales" included $1.3 million and $3.3 million,
respectively, in stock-based compensation expense. In the three and
nine months ended September 30, 2017, “Cost of sales” included $0.7
million and $1.7 million, respectively, in stock-based compensation
expense. Beginning with the first quarter of 2018, the company is
adjusting for the stock-based compensation expense recorded in
“Cost of sales” in its reconciliation of "Non-GAAP net income
attributable to Vertex" and "Non-GAAP cost of sales". In its
Non-GAAP reconciliation, the company is not adjusting for the
stock-based compensation expense recorded in “Cost of sales” for
the three and nine months ended September 30, 2017.
Note 10: In the three and nine months ended September 30,
2018, "Estimated income taxes related to non-GAAP adjustments to
pre-tax income (loss)" related to BioAxone's income taxes. In the
three and nine months ended September 30, 2017, "Estimated income
taxes related to non-GAAP adjustments to pre-tax income (loss)"
primarily related to the benefit from income taxes recorded as a
result of the impairment and subsequent deconsolidation of Parion
described in Note 3.
KALYDECO® (ivacaftor) U.S. INDICATION AND
IMPORTANT SAFETY INFORMATION
KALYDECO (ivacaftor) is a prescription medicine used for the
treatment of cystic fibrosis (CF) in patients age 12 months and
older who have at least one mutation in their CF gene that is
responsive to KALYDECO. Patients should talk to their doctor to
learn if they have an indicated CF gene mutation. It is not known
if KALYDECO is safe and effective in children under 12 months of
age.
Patients should not take KALYDECO if they are taking certain
medicines or herbal supplements such as: the antibiotics
rifampin or rifabutin; seizure medications such as phenobarbital,
carbamazepine, or phenytoin; or St. John's wort.
Before taking KALYDECO, patients should tell their doctor if
they: have liver or kidney problems; drink grapefruit juice, or
eat grapefruit or Seville oranges; are pregnant or plan to become
pregnant because it is not known if KALYDECO will harm an unborn
baby; and are breastfeeding or planning to breastfeed because is
not known if KALYDECO passes into breast milk.
KALYDECO may affect the way other medicines work, and other
medicines may affect how KALYDECO works. Therefore the dose of
KALYDECO may need to be adjusted when taken with certain
medications. Patients should especially tell their doctor if they
take antifungal medications such as ketoconazole, itraconazole,
posaconazole, voriconazole, or fluconazole; or antibiotics such as
telithromycin, clarithromycin, or erythromycin.
KALYDECO can cause dizziness in some people who take it.
Patients should not drive a car, use machinery, or do anything that
needs them to be alert until they know how KALYDECO affects them.
Patients should avoid food containing grapefruit or Seville
oranges while taking KALYDECO.
KALYDECO can cause serious side effects including:
High liver enzymes in the blood have been reported in
patients receiving KALYDECO. The patient's doctor will do blood
tests to check their liver before starting KALYDECO, every 3 months
during the first year of taking KALYDECO, and every year while
taking KALYDECO. For patients who have had high liver enzymes in
the past, the doctor may do blood tests to check the liver more
often. Patients should call their doctor right away if they have
any of the following symptoms of liver problems: pain or discomfort
in the upper right stomach (abdominal) area; yellowing of their
skin or the white part of their eyes; loss of appetite; nausea or
vomiting; or dark, amber-colored urine.
Abnormality of the eye lens (cataract) has been noted in
some children and adolescents receiving KALYDECO. The patient's
doctor should perform eye examinations prior to and during
treatment with KALYDECO to look for cataracts. The most common side
effects include headache; upper respiratory tract infection (common
cold), which includes 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 KALYDECO.
Please click here to see the full U.S.
Prescribing Information for KALYDECO.
INDICATION AND IMPORTANT SAFETY INFORMATION FOR
ORKAMBI® (lumacaftor/ivacaftor)
ORKAMBI is a prescription medicine used for the treatment of
cystic fibrosis (CF) in patients age 2 years and older who have two
copies of the F508del mutation (F508del/F508del) in their CFTR
gene. ORKAMBI should only be used in these patients. It is not
known if ORKAMBI is safe and effective in children under 2 years of
age.
Patients should not take ORKAMBI if they are taking certain
medicines or herbal supplements, such as: the antibiotics
rifampin or rifabutin; the seizure medicines phenobarbital,
carbamazepine, or phenytoin; the sedatives and anti-anxiety
medicines triazolam or midazolam; the immunosuppressant medicines
cyclosporine, everolimus, sirolimus, or tacrolimus; or St. John’s
wort.
Before taking ORKAMBI, patients should tell their doctor
about all their medical conditions, including if they: have or
have had liver problems; have kidney problems; have had an organ
transplant; or are using birth control. Hormonal contraceptives,
including oral, injectable, transdermal, or implantable forms
should not be used as a method of birth control when taking
ORKAMBI. Patients should tell their doctor if they are pregnant or
plan to become pregnant (it is unknown if ORKAMBI will harm the
unborn baby) or if they are breastfeeding or planning to breastfeed
(it is unknown if ORKAMBI passes into breast milk).
ORKAMBI may affect the way other medicines work and other
medicines may affect how ORKAMBI works. Therefore, the dose of
ORKAMBI or other medicines may need to be adjusted when taken
together. Patients should especially tell their doctor if they
take: antifungal medicines such as ketoconazole, itraconazole,
posaconazole, or voriconazole; or antibiotics such as
telithromycin, clarithromycin, or erythromycin.
When taking ORKAMBI, patients should tell their doctor if
they stop ORKAMBI for more than 1 week as the doctor may need
to change the dose of ORKAMBI or other medicines the patient is
taking.
ORKAMBI can cause serious side effects, including:
Worsening of liver function in people with severe liver
disease. The worsening of liver function can be serious or cause
death. Patients should talk to their doctor if they have been told
they have liver disease as their doctor may need to adjust the dose
of ORKAMBI.
High liver enzymes in the blood, which can be a sign of
liver injury. The patient’s doctor will do blood tests to
check their liver before they start ORKAMBI, every three months
during the first year of taking ORKAMBI, and annually thereafter.
The patient should call the doctor right away if they have any of
the following symptoms of liver problems: pain or discomfort in the
upper right stomach (abdominal) area; yellowing of the skin or the
white part of the eyes; loss of appetite; nausea or vomiting; dark,
amber-colored urine; or confusion.
Breathing problems such as shortness of breath or chest
tightness in patients when starting ORKAMBI, especially in patients
who have poor lung function. If a patient has poor lung function,
their doctor may monitor them more closely when starting
ORKAMBI.
An increase in blood pressure in some people receiving
ORKAMBI. The patient’s doctor should monitor their blood pressure
during treatment with ORKAMBI.
Abnormality of the eye lens (cataract) in some children
and adolescents receiving ORKAMBI. For children and adolescents,
the patient’s doctor should perform eye examinations before and
during treatment with ORKAMBI to look for cataracts.
The most common side effects of ORKAMBI include:
breathing problems, such as shortness of breath and chest
tightness; nausea; diarrhea; fatigue; increase in a certain blood
enzyme called creatinine phosphokinase; rash; gas; common cold,
including sore throat, stuffy or runny nose; flu or flu-like
symptoms; and irregular, missed, or abnormal periods (menses) and
increase in the amount of menstrual bleeding.
Side effects seen in children are similar to those seen
in adults and adolescents. Additional common side effects seen in
children include: cough with sputum, stuffy nose, headache, stomach
pain, and increase in sputum.
Please click here to see the full Prescribing
Information for ORKAMBI.
U.S INDICATION AND IMPORTANT SAFETY INFORMATION FOR
SYMDEKO® (tezacaftor/ivacaftor and ivacaftor)
tablets
SYMDEKO is a prescription medicine used for the treatment of
cystic fibrosis (CF) in patients aged 12 years and older who have
two copies of the F508del mutation, or who have at least one
mutation in the CF gene that is responsive to treatment with
SYMDEKO. Patients should talk to their doctor to learn if they have
an indicated CF gene mutation. It is not known if SYMDEKO is safe
and effective in children under 12 years of age.
Patients should not take SYMDEKO if they take certain
medicines or herbal supplements such as: the antibiotics
rifampin or rifabutin; seizure medicines such as phenobarbital,
carbamazepine, or phenytoin; St. John's wort.
Before taking SYMDEKO, patients should tell their doctor if
they: have or have had liver problems; have kidney problems;
are pregnant or plan to become pregnant because it is not known if
SYMDEKO will harm an unborn baby; are breastfeeding or planning to
breastfeed because it is not known if SYMDEKO passes into breast
milk.
SYMDEKO may affect the way other medicines work, and other
medicines may affect how SYMDEKO works. Therefore, the dose of
SYMDEKO may need to be adjusted when taken with certain medicines.
Patients should especially tell their doctor if they take
antifungal medicines such as ketoconazole, itraconazole,
posaconazole, voriconazole, or fluconazole; or antibiotics such as
telithromycin, clarithromycin, or erythromycin.
SYMDEKO may cause dizziness in some people who take it.
Patients should not drive a car, use machinery, or do anything that
requires alertness until they know how SYMDEKO affects them.
Patients should avoid food or drink that contains
grapefruit or Seville oranges while they are taking SYMDEKO.
SYMDEKO can cause serious side effects, including:
High liver enzymes in the blood, which have been reported
in people treated with SYMDEKO or treated with ivacaftor alone. The
patient's doctor will do blood tests to check their liver before
they start SYMDEKO, every 3 months during the first year of taking
SYMDEKO, and every year while taking SYMDEKO. Patients should call
their doctor right away if they have any of the following symptoms
of liver problems: pain or discomfort in the upper right stomach
(abdominal) area; yellowing of the skin or the white part of the
eyes; loss of appetite; nausea or vomiting; dark, amber-colored
urine.
Abnormality of the eye lens (cataract) in some children
and adolescents treated with SYMDEKO or with ivacaftor alone. If
the patient is a child or adolescent, their doctor should perform
eye examinations before and during treatment with SYMDEKO to look
for cataracts.
The most common side effects of SYMDEKO include headache,
nausea, sinus congestion, and dizziness.
These are not all the possible side effects of SYMDEKO.
Please click here to see the full U.S.
Prescribing Information for SYMDEKO.
About Vertex
Vertex is a global biotechnology company that invests in
scientific innovation to create transformative medicines for people
with serious and life-threatening diseases. In addition to clinical
development programs in CF, Vertex has more than a dozen ongoing
research programs focused on the underlying mechanisms of other
serious diseases.
Founded in 1989 in Cambridge, Mass., Vertex's headquarters is
now located in Boston's Innovation District. Today, the company has
research and development sites and commercial offices in the United
States, Europe, Canada and Australia. Vertex is consistently
recognized as one of the industry's top places to work, including
being named to Science magazine's Top Employers in the life
sciences ranking for eight years in a row.
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 and Mr. Smith's
statements in this press release, the information provided in the
section captioned "2018 Financial Guidance" and statements
regarding (i) the timing and expected outcome of regulatory
applications, including NDAs and MAAs and (ii) the development plan
and timelines for our product development candidates, including
tezacaftor in combination with ivacaftor, our next-generation
triple combination regimens, CTX001, VX-150 and the company's AAT
correctors. 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 2018 CF net product revenues and
expenses may be incorrect (including because one or more of the
company's assumptions underlying its expectations may not be
realized), 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
4:30 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-E)
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version on businesswire.com: https://www.businesswire.com/news/home/20181024005886/en/
Vertex Contacts:Investors:Michael Partridge,
617-341-6108orEric Rojas, 617-961-7205orZach Barber,
617-341-6470orMedia:617-341-6992mediainfo@vrtx.com
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