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Vertex Reports First Quarter 2014 Financial Results and Provides Updates on Key Business Priorities
-Net product revenues of
-Cash, cash equivalents and marketable securities of
-Six-month dosing period complete for Phase 3 TRAFFIC and TRANSPORT studies of lumacaftor in combination with ivacaftor for people with CF homozygous for the F508del mutation-
Vertex reported total first quarter 2014 revenues of
Vertex also provided updated financial guidance for 2014 non-GAAP
revenues and non-GAAP operating expenses and maintained its guidance for
2014 KALYDECO revenues as provided on
"In 2014, we are focused on three critical objectives to support the
long-term growth of our business - advancing our clinical development
program in cystic fibrosis, prudently managing our financial profile,
and growing our clinical pipeline to create future medicines," commented
First Quarter 2014 Non-GAAP Financial Results
The first quarter 2014 non-GAAP financial results reflect the removal of
hepatitis C costs and revenues and primarily exclude stock-based
compensation expense and transition costs related to the relocation of
our corporate headquarters. The first quarter 2013 non-GAAP financial
results primarily exclude expenses related to
Total Non-GAAP Revenues: Total non-GAAP revenues, which exclude
hepatitis C revenues and royalties, for the first quarter of 2014 were
- Net Product Revenues from KALYDECO
Vertex's first quarter 2014 net product revenues from KALYDECO were
Three Months Ended
|GAAP Revenues||HCV related Revenues||Non-GAAP Revenues|
|KALYDECO revenues, net||$||99.5||$||—||$||99.5|
|INCIVEK revenues, net||3.9||(3.9||)||—|
|Total product revenues, net||103.5||(3.9||)||99.5|
Non-GAAP Operating Expenses: Total non-GAAP operating expenses
for the first quarter of 2014 were
Research and Development (R&D) Expenses: Non-GAAP R&D
$181.5 millionfor the first quarter of 2014, compared to $194.8 millionin non-GAAP R&D expenses for the first quarter of 2013. This reduction was the result of a narrowed clinical focus and prioritization of the business toward medicines for CF and other expense management activities.
Sales, General and Administrative (SG&A) Expenses: Non-GAAP
SG&A expenses were
$52.4 millionfor the first quarter of 2014, compared to $79.8 millionin non-GAAP SG&A expenses for the first quarter of 2013. This reduction was the result of a narrowed commercial focus toward CF medicines and other expense management activities.
Non-GAAP Net Income (Loss) Attributable to Vertex: Vertex's first
quarter 2014 non-GAAP net loss was
Cash Position: As of
2014 Financial Guidance
This section contains forward-looking guidance about the financial
Total Revenues: Vertex today revised its estimate for total
2014 non-GAAP net revenues. The company now expects total non-GAAP
$520to $550 million, which excludes revenues related to hepatitis C (INCIVEK and INCIVO royalties).
KALYDECO Net Revenues: Vertex today maintained its estimate
for total 2014 KALYDECO net revenues of
$470to $500 million. Achieving this guidance depends on anticipated revenues from Australiaand Canadafollowing the potential completion of reimbursement discussions, from Europefollowing the potential approval of KALYDECO for use in additional gating mutations and in the U.S. from the use of KALYDECO in eight additional mutations for which it was approved for use in February 2014.
- KALYDECO Net Revenues: Vertex today maintained its estimate for total 2014 KALYDECO net revenues of
Non-GAAP Operating Expenses: Vertex today revised its estimate
for its 2014 non-GAAP operating expenses. The company now expects 2014
non-GAAP operating expenses to be in the range of
$890to $930 million. The anticipated decrease in total non-GAAP operating expenses is primarily attributable to expected savings from the company's decision to end further investment in hepatitis C.
Non-GAAP Financial Measures
In this press release, Vertex's financial results and financial guidance
are provided in accordance with accounting principles generally accepted
First Quarter 2014 GAAP Financial Results
Total Revenues: Total revenues for the first quarter of 2014 were
Operating Costs and Expenses: Total operating costs and expenses
for the first quarter of 2014 were
R&D Expenses: R&D expenses were
$239.0 millionfor the first quarter of 2014, including $57.4 millionof certain charges, compared to $218.1 millionfor the first quarter of 2013, including $23.3 millionof certain charges.
Sales, General and Administrative (SG&A) Expenses: SG&A
$74.2 millionfor the first quarter of 2014, including $21.8 millionof certain charges, compared to $92.9 millionfor the first quarter of 2013, including $13.1 millionof certain charges.
Net Loss Attributable to Vertex: Vertex's first quarter 2014 net
Research and Development Updates
Vertex today provided the following research and development updates:
Cystic Fibrosis (CF)
Global Availability of KALYDECO (ivacaftor)
KALYDECO is currently available to all eligible patients in
the United States, England, Scotland, Northern Ireland, Wales, the Republic of Ireland, France, Germany, the Netherlands, Austria, Denmark, Sweden, Norway, Greeceand Italy. KALYDECO is also approved in Australiaand Canada, and Vertex is in active discussions with relevant agencies in these countries to expand access to KALYDECO for eligible patients through public reimbursement. There are approximately 300 people age 6 years and older who have the G551D mutation in Australiaand Canada.
In February, the
U.S. Food and Drug Administration(FDA) approved a supplemental New Drug Application (sNDA) for KALYDECO (ivacaftor) for people with cystic fibrosis (CF) ages 6 and older who have one of eight additional mutations in the cystic fibrosis transmembrane conductance regulator (CFTR) gene. With the approval of the sNDA, KALYDECO is now approved for use in people with CF with the following nine mutations: G551D, G178R, S549N, S549R, G551S, G1244E, S1251N, S1255P and G1349D. In the United States, approximately 150 people ages 6 and older have one of the additional eight mutations for which KALYDECO is now approved.
Additional Activities and Clinical Studies Aimed at Increasing the Number of People Eligible for Ivacaftor
Gating Mutations in
Europe: Vertex submitted a Marketing Authorization Application (MAA) variation in Europefor approval of ivacaftor in people with CF ages 6 years and older who have a non-G551D gating mutation. Outside the U.S., approximately 250 people ages 6 years and older have these non-G551D gating mutations, and the large majority of these patients are in Europe.
R117H Mutation: In
December 2013, Vertex announced data from a Phase 3 study of people with CF ages 6 years and older with one copy of the R117H mutation. The study did not meet its primary endpoint of the absolute change from baseline in FEV1 (percent predicted forced expiratory volume in one second), however a pre-specified subset analysis in patients 18 years of age and older showed statistically significant improvements in lung function and other key secondary endpoints. Based on these data, the company plans to submit an sNDA in the U.S. and MAA variation in Europefor people ages 18 and older who have the R117H mutation. The sNDA submission is planned for mid-2014, followed by the MAA variation submission in the second half of 2014. In North America, Europeand Australia, approximately 700 people with CF ages 18 and older have at least one copy of an R117H mutation.
Children Ages 2 to 5 with Gating Mutations: A Phase 3 study of
ivacaftor in children with CF ages 2 to 5 with a gating mutation is
fully enrolled, and all patients have completed the 24-week dosing
period. The primary endpoint of this study is safety, and secondary
endpoints include pharmacokinetics, change in sweat chloride and
change in weight. Data from this study are expected in the third
quarter of 2014 to support a potential NDA submission and MAA
variation in the second half of 2014. In
North America, Europeand Australia, approximately 300 children ages 2 to 5 have the gating mutations evaluated in this study.
Residual Function Study: Enrollment is complete in a Phase 2
proof-of-concept study evaluating ivacaftor in people with CF who have
clinical evidence of residual CFTR function. Data from this study are
expected in the second quarter of 2014. In
North America, Europeand Australia, more than 3,000 people ages 6 and older have non-R117H mutations that result in residual function.
Phase 3 Program of Lumacaftor in Combination with Ivacaftor in People with CF Who Have Two Copies of the F508del Mutation
- All patients have now completed the six-month dosing period in the global Phase 3 TRAFFIC and TRANSPORT studies evaluating lumacaftor (VX-809) in combination with ivacaftor in people with CF ages 12 and older who have two copies (homozygous) of the F508del mutation. Vertex expects 24-week data from these studies to be available in mid-2014 to support the potential submission of an NDA and MAA for the combination therapy in people homozygous for the F508del mutation in the second half of 2014.
VX-661 in Combination with Ivacaftor
- Vertex recently began dosing in a 12-week Phase 2 study of VX-661 in combination with ivacaftor in people with CF who have two copies of the F508del mutation. The study is designed to evaluate safety, efficacy and pharmacokinetics to characterize VX-661 for further clinical development.
- In a separate press release issued today, Vertex announced that treatment with the combination of VX-661 and KALYDECO in a 28-day Phase 2 study showed statistically significant improvements in lung function (FEV1), as well as decreases in sweat chloride, in people (n=18) with the F508del mutation and G551D mutation who were already taking KALYDECO. VX-661 was generally well-tolerated when dosed in combination with KALYDECO, and all 18 patients completed the 28-day treatment period.
Vertex also announced today that the U.S.
FDAhas granted VX-661 Orphan Drug Designation. The FDAgrants Orphan Drug Designation to medicines intended to treat less than 200,000 people in the U.S.
- Vertex today announced that it has amended the terms of its agreement with Alios BioPharma regarding the development and commercialization of the nucleotide analogue hepatitis C virus (HCV) polymerase inhibitor VX-135. Based on the revised agreement and the rapid changes in the hepatitis C treatment landscape following the introduction of new oral therapies, Vertex plans to out-license VX-135 and to end further investment into research and development efforts in hepatitis C.
First Quarter Results
Condensed Consolidated Statements of Operations Data
(in thousands, except per share amounts)
Three Months Ended
|Product revenues, net||$||103,461||$||267,381|
|Costs and expenses:|
|Cost of product revenues||8,572||30,955|
|Research and development expenses (R&D)||238,963||218,095|
|Sales, general and administrative expenses (SG&A)||74,212||92,879|
|Intangible asset impairment charge (Note 1)||—||412,900|
|Total costs and expenses||334,839||766,656|
|Loss from operations||(216,388||)||(438,288||)|
|Interest expense, net||(15,717||)||(3,465||)|
|Other income (expense), net||451||(1,187||)|
|Loss before provision for (benefit from) income taxes||(231,654||)||(442,940||)|
|Provision for (benefit from) income taxes (Note 1)||803||(130,313||)|
|Net loss attributable to noncontrolling interest (Note 2)||—||4,611|
|Net loss attributable to Vertex||$||(232,457||)||$||(308,016||)|
|Net loss per share attributable to Vertex common shareholders:|
|Shares used in per share calculations:|
|Three Months Ended|
|KALYDECO revenues, net||$||99.5||$||109.5||$||101.1||$||99.0||$||61.8|
|INCIVEK revenues, net||3.9||19.3||85.6||155.8||205.6|
|Total product revenues, net||103.5||128.8||186.7||254.8||267.4|
Reconciliation of GAAP to
(in thousands, except per share amounts)
Three Months Ended
HCV Related Costs
|Income (loss) from operations||$||(216,388||)||$||46,580||$||19,611||$||11,216||$||3,656||$||(135,325||)|
|Other income (expense), net||(15,266||)||—||—||—||—||(15,266||)|
|Income (loss) before provision for (benefit from) income taxes||(231,654||)||46,580||19,611||11,216||3,656||(150,591||)|
|Provision for income taxes||803||—||—||—||—||803|
|Net income (loss)||$||(232,457||)||$||46,580||$||19,611||$||11,216||$||3,656||$||(151,394||)|
|Net loss per diluted share attributable to Vertex common shareholders (Note 6)||$||(1.00||)||$||(0.65||)|
Three Months Ended
|Alios Transaction (Note 2)||
Intangible Asset Charge (VX-222)
|Other Adjustments (Note 5)||Non-GAAP|
|Income (loss) from operations||$||(438,288||)||$||31,152||$||5,289||$||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||)||31,152||5,297||412,900||39||6,448|
|Provision for (benefit from) income taxes||(130,313||)||—||3,426||127,586||—||699|
|Net income (loss)||(312,627||)||31,152||1,871||285,314||39||5,749|
Net loss (income) attributable to noncontrolling interest (
|Net income (loss) attributable to Vertex||$||(308,016||)||$||31,152||$||(2,740||)||$||285,314||$||39||$||5,749|
|Net income (loss) per diluted share attributable to Vertex common shareholders (Note 6)||$||(1.43||)||$||0.03|
Reconciliation of GAAP to
Three Months Ended
|GAAP total costs and expenses||$||334,839||$||766,656|
|Cost of product revenues and royalty expenses||(15,476||)||(42,743||)|
|Stock-based compensation expense (Note 3)||(46,580||)||(31,152||)|
|Corporate headquarters relocation||(19,611||)||—|
|HCV related costs (Note 4)||(15,570||)||(412,900||)|
|Other adjustments (Note 5)||(3,656||)||(39||)|
|Non-GAAP operating costs and expenses||$||233,946||$||274,533|
|GAAP research and development expenses||$||238,963||$||218,095|
|Stock-based compensation expense (Note 3)||(32,900||)||(19,273||)|
|Corporate headquarters relocation||(12,201||)||—|
|HCV related costs (Note 4)||(9,002||)||—|
|Other adjustments (Note 5)||(3,325||)||—|
|Non-GAAP research and development expenses||$||181,535||$||194,774|
|GAAP sales, general and administrative expenses||$||74,212||$||92,879|
|Stock-based compensation expense (Note 3)||(13,680||)||(11,879||)|
|Corporate headquarters relocation||(2,200||)||—|
|HCV related costs (Note 4)||(5,921||)||—|
|Non-GAAP sales, general and administrative expenses||$||52,411||$||79,759|
Condensed Consolidated Balance Sheets Data
|Cash, cash equivalents and marketable securities||$||1,324,200||$||1,465,076|
|Accounts receivable, net||59,858||85,517|
|Other current assets||35,011||23,836|
|Property and equipment, net||726,204||696,911|
|Other non-current assets||9,452||2,432|
|Liabilities and Shareholders' Equity|
|Accrued restructuring expense||23,867||28,353|
|Construction financing lease obligation||473,360||440,937|
|Total liabilities and shareholders' equity||$||2,197,108||$||2,319,041|
|Common shares outstanding||236,201||233,789|
Note 1: The company determined that the value of VX-222 had
become impaired and that the fair value of VX-222 was zero as of
Note 2: The company consolidated the financial statements of its
Note 3: Stock compensation expense in the three months ended
Note 4: In the three months ended
Note 5: In the three months ended
Note 6: Shares used in non-GAAP net income (loss) per diluted
share attributable to Vertex common shareholders were 232,887,000 and
218,317,000 for the three months ended
INDICATION AND IMPORTANT SAFETY INFORMATION FOR KALYDECO (ivacaftor)
Ivacaftor (150 mg tablets) is indicated for the treatment of cystic fibrosis (CF) in patients age 6 years and older who have a G551D mutation in the CFTR gene.
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 6 years of age have not been established.
Elevated liver enzymes (transaminases; ALT and AST) have been reported in patients receiving ivacaftor. 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. 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.
Ivacaftor can cause serious adverse reactions including abdominal pain and high liver enzymes in the blood. The most common side effects associated with ivacaftor include headache; upper respiratory tract infection (the common cold), including sore throat, nasal or sinus congestion, and runny nose; stomach (abdominal) pain; diarrhea; rash; 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 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.
Indication and Important Safety Information for INCIVEK (telaprevir)
INCIVEK® (telaprevir) is a prescription medicine used with the medicines peginterferon alfa and ribavirin to treat chronic (lasting a long time) hepatitis C genotype 1 infection in adults with stable liver problems, who have not been treated before or who have failed previous treatment. It is not known if INCIVEK is safe and effective in children under 18 years of age.
Important Safety Information
INCIVEK® (telaprevir) should always be used in combination with peginterferon alfa and ribavirin. INCIVEK combination treatment may cause serious side effects including skin rash and serious skin reactions, anemia (low red blood cell count) that can be severe, and birth defects or death of an unborn baby.
Skin rashes are common with INCIVEK combination treatment. Sometimes these skin rashes and other skin reactions can become serious, require treatment in a hospital, and may lead to death. Patients should call their healthcare provider right away if they develop any skin changes or itching during treatment with INCIVEK. Their healthcare provider will decide if they need treatment or if they need to stop INCIVEK or any of their other medicines. Patients should not stop taking INCIVEK combination treatment without talking with their healthcare provider first.
Patients' healthcare providers will do blood tests regularly to check for anemia. If anemia is severe, the healthcare providers may tell them to stop taking INCIVEK.
INCIVEK combined with peginterferon alfa and ribavirin may cause birth defects or death of an unborn baby. Therefore, a patient should not take INCIVEK combination treatment if she is pregnant or may become pregnant, or if he is a man with a sexual partner who is pregnant. Females who can become pregnant and females whose male partner takes these medicines must have a negative pregnancy test before starting treatment, every month during treatment, and for 6 months after treatment ends. Patients must use two forms of effective birth control during treatment and for 6 months after all treatment has ended. These two forms of birth control should not contain hormones, as these may not work during treatment with INCIVEK.
INCIVEK and other medicines can affect each other and can also cause side effects that can be serious or life-threatening. There are certain medicines patients cannot take with INCIVEK combination treatment. Patients should tell their healthcare providers about all the medicines they take, including prescription and over-the-counter medicines, vitamins and herbal supplements.
The most common side effects of INCIVEK combination treatment include itching, nausea, diarrhea, vomiting, anal or rectal problems (including hemorrhoids, discomfort, burning or itching around or near the anus), taste changes and tiredness. There are other possible side effects of INCIVEK, and side effects associated with peginterferon alfa and ribavirin also apply to INCIVEK combination treatment. Patients should tell their healthcare provider about any side effect that bothers them or doesn't go away.
Please see full Prescribing Information including Boxed Warning, and the Medication Guide for INCIVEK available at www.INCIVEK.com.
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 research programs aimed at other serious and life-threatening diseases.
Founded in 1989 in
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 fourth paragraph of the press
release, the information provided in the section captioned "2014
Financial Guidance," and the information provided regarding (i) Vertex's
plan to submit an sNDA in the U.S. and an MAA variation in
Conference Call and Webcast
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