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Vertex Reports First Quarter 2016 Financial Results
-First quarter 2016 cystic fibrosis product revenues of
-Provides 2016 guidance for ORKAMBI product revenues of
-Provides update on approved CF medicines and pipeline of investigational medicines-
Three Months Ended
|(in millions, except per share and percentage data)|
|ORKAMBI product revenues, net||$||223||$||—||N/A|
|KALYDECO product revenues, net||$||
|TOTAL CF product revenues, net||$||
|GAAP net loss||$||(42||)||$||(199||)||(79)%|
|GAAP net loss per share||$||(0.17||)||$||(0.83||)||(80)%|
|Non-GAAP net income (loss)||$||22||$||(148||)||N/A|
|Non-GAAP net income (loss) per share||$||0.09||$||(0.62||)||N/A|
"2016 marks an important transition for Vertex following the launch of
ORKAMBI. With recent approvals and label expansions, there are now
approximately 27,000 people with CF eligible to take ORKAMBI or
KALYDECO. The number of CF patients eligible for and initiating
treatment is driving significant revenue growth for a second straight
year, and we expect this trend to continue in 2017 and beyond," said
CF Medicines and Pipeline Update
Vertex today provided the following updates for ORKAMBI, KALYDECO and the company's progress toward developing new medicines with the goal of treating all people with CF:
Additional Regulatory Approvals Support Expansion Efforts:
During the first quarter of 2016, Vertex received regulatory approval
for ORKAMBI for the treatment of people with CF ages 12 and older who
have two copies of the F508del mutation in
Supplemental New Drug Application in Children Ages 6 to 11:
Vertex has submitted data from an open label Phase 3 clinical safety
study of ORKAMBI in children ages 6 to 11 who have two copies of the F508del
mutation for presentation at the 39th
Enrollment Complete in Phase 3 Study of Children Ages 6 to 11:
Vertex has completed enrollment in a six-month Phase 3 efficacy study
evaluating ORKAMBI in approximately 200 children ages 6 to 11 who have
two copies of the F508del mutation. Pending data from the study,
Vertex plans to submit a Marketing Authorization Application (MAA)
Study in Children Under Two Years of Age: Vertex has initiated a Phase 3 clinical study of KALYDECO in children under 2 years of age to evaluate the effect of KALYDECO on markers of CF in young children. The study will utilize a weight-based dose of KALYDECO granules that can be mixed in soft foods or liquids. The study will enroll infants with one of the 10 mutations for which KALYDECO is currently approved.
Regulatory Filing for Patients with Residual Function Mutations:
Pipeline of Investigational Medicines for CF
VX-661 - Broad Phase 3 program ongoing in multiple groups of people with CF
Vertex provided the following updates on the Phase 3 studies of the investigational combination of VX-661 and ivacaftor in multiple different groups of people with CF who have at least one copy of the F508del mutation:
- Enrollment in the study in people with two copies of the F508del mutation is expected to be complete in mid-2016, and data from this Phase 3 study are expected in early 2017.
- Enrollment is ongoing in the Phase 3 study of VX-661 in combination with ivacaftor in patients with one copy of the F508del mutation and a second mutation that results in a gating defect. Vertex plans to complete enrollment of this study in late 2016 or early 2017.
- Vertex has revised its enrollment target for the Phase 3 study of VX-661 in combination with ivacaftor in patients with one copy of the F508del mutation and a second mutation that results in residual CFTR function. The original expectation was for up to 300 patients to enroll in this study. Vertex now plans to enroll approximately 200 patients. Enrollment is expected to be complete in the second half of 2016.
- Enrollment is complete in Part A of the study in people with one copy of the F508del mutation and a second mutation that results in minimal CFTR function. An interim futility analysis of efficacy data from Part A of this study is expected to be completed in the third quarter of 2016.
In addition to evaluating the efficacy of the combination regimen, these Phase 3 studies will also provide safety data on the combination of VX-661 and ivacaftor to support the planned development of a triple combination regimen that includes a next-generation corrector in combination with VX-661 and ivacaftor.
VX-371 - Enrollment ongoing in Phase 2 study of VX-371 in combination with ORKAMBI
Vertex today announced data from an exploratory Phase 2, 14-day study of its inhaled epithelial sodium channel (ENaC) inhibitor, VX-371 (P-1037), being developed in collaboration with Parion Sciences. The study dosed 142 people ages 12 and older with a confirmed diagnosis of CF. There was no restriction based on CFTR mutation. 136 people completed the study. Patients were not using any CFTR modulator therapy immediately before or during the study. The primary endpoint of the study was safety compared to placebo. Secondary endpoints evaluated the effect on mean absolute forced expiratory volume in one second (FEV1) and patient-reported respiratory symptoms as reported in the CF questionnaire-revised (CFQ-R). The study met its primary safety endpoint, and safety data from the study showed that VX-371 was generally well tolerated. There were no statistically significant changes in FEV1 or CFQ-R for those who received VX-371.
The clinical safety data announced today provide support for the company's ongoing placebo-controlled Phase 2a study evaluating VX-371 in combination with ORKAMBI, both with and without the addition of hypertonic saline. This study is expected to enroll approximately 150 people with CF ages 12 and older who have two copies of the F508del mutation. The primary endpoints of the Phase 2a study are safety and mean absolute change from baseline in FEV1 at day 28 compared to placebo.
In vitro, VX-371 showed a meaningful change in cilia beat frequency when VX-371 was used in combination with ORKAMBI in human bronchial epithelial cells with two copies of the F508del mutation, but did not show a meaningful change in cilia beat frequency when VX-371 was used alone.
Next-Generation Correctors - Phase 1 studies in healthy volunteers progressing as planned
In the fourth quarter of 2015, Vertex initiated clinical development of two next-generation correctors known as VX-152 and VX-440. Both VX-152 and VX-440 are being evaluated alone and as part of a triple combination with VX-661 and ivacaftor in ongoing Phase 1 studies in healthy volunteers.
Pending successful completion of the Phase 1 studies of VX-152 and VX-440, the company expects to begin Phase 2 proof-of-concept studies in combination with VX-661 and ivacaftor in the second half of 2016.
CRISPR Collaboration - Gene editing collaboration focused on discovering potential treatments to address the mutations and genes known to cause and contribute to CF
Other Research and Development Programs
Beyond CF, Vertex is advancing research and development programs focused on the treatment of key mechanisms in serious diseases. The company today provided the following updates to its pipeline programs:
VX-970: VX-970 is an inhibitor of ATR, a critical regulator of
the DNA damage repair system. Vertex presented data from a Phase 1 trial
of VX-970 in combination with cisplatin in patients with advanced solid
tumors at the Annual
Vertex is currently conducting two Phase 1/2 studies that are enrolling specific cohorts of triple-negative breast cancer patients and non-small cell lung cancer patients. In these studies, VX-970 is being dosed in combination with commonly used DNA-damaging repair therapies.
Vertex has also entered into two cooperative research and development
agreements (CRADAs) with the
VX-150: Vertex is developing VX-150 as a potential medicine for the treatment of pain. VX-150 is designed to block pain signaling through inhibition of a sodium channel known as NaV 1.8. In the first quarter of 2016, Vertex initiated a six-week crossover Phase 2 proof-of-concept study of VX-150 in approximately 100 people with symptomatic osteoarthritis of the knee. Vertex expects to complete enrollment of this study in the second half of 2016.
Acute Spinal Cord Injury
VX-210: In the first quarter of 2016, Vertex initiated a randomized, double-blind, placebo controlled Phase 2b/3 study to evaluate the efficacy and safety of VX-210 in patients with certain acute cervical spinal cord injuries. Vertex is developing VX-210 as a potential medicine for acute spinal cord injury. VX-210 is designed to inhibit a protein known as Rho that blocks neural regeneration after injury.
First Quarter 2016 Financial Highlights
Net product revenues from ORKAMBI were
$223.1 million. ORKAMBI was launched in the U.S.in July 2015.
Net product revenues from KALYDECO were
$170.5 million, compared to $130.2 millionfor the first quarter of 2015.
Non-GAAP research and development (R&D) expenses were
$222.0 millioncompared to $177.2 millionfor the first quarter of 2015. The increase was primarily driven by increased investment to progress our portfolio of CF medicines. GAAP R&D expenses, including stock-based compensation expense, were $255.9 millioncompared to $215.6 millionfor the first quarter of 2015.
Non-GAAP sales, general and administrative (SG&A) expenses were
$83.7 millioncompared to $69.1 millionfor the first quarter of 2015. The increase was primarily driven by increased investment to support the global launch of ORKAMBI. GAAP SG&A expenses, including stock-based compensation expense, were $105.2 millioncompared to $85.9 millionfor the first quarter of 2015.
Net Income (Loss) Attributable to Vertex:
Non-GAAP net income was
$22.4 million, or $0.09per diluted share, compared to a non-GAAP net loss of $148.4 million, or $0.62per diluted share, for the first quarter of 2015. The GAAP net loss, including stock-based compensation expense, was $41.6 million, or $0.17per diluted share, compared to Vertex's GAAP net loss of $198.6 million, or $0.83per diluted share, for the first quarter of 2015.
March 31, 2016, Vertex had $1.03 billionin cash, cash equivalents and marketable securities compared to $1.04 billionin cash, cash equivalents and marketable securities as of December 31, 2015.
March 31, 2016, Vertex had $300 millionoutstanding from a credit agreement, repayable by the end of the third quarter of 2017. The agreement allows for the facility to increase to up to $500 million.
2016 Financial Guidance:
Vertex today provided 2016 revenue guidance for ORKAMBI and increased
2016 revenue guidance for KALYDECO. The company also reiterated guidance
for its 2016 combined non-GAAP R&
ORKAMBI: The company anticipates total 2016 product revenues for
Uptake: Approximately 65% of the 8,500 eligible patients in the
U.S.have initiated treatment as of March 31, 2016. Vertex continues to expect the vast majority of eligible patients ages 12 and older in the U.S.will initiate treatment by the end of 2016.
- Persistence: Of the patients who have started on treatment, approximately 15% discontinued treatment within the first three months of initiation. The company projects that the proportion of all patients who initiate and remain on treatment will stabilize at approximately 70% to 80%.
- Compliance: The overall compliance rate, which reflects the number of pills actually taken by a patient in a given month, is expected to be between 70% to 80%.
2016 ORKAMBI guidance also reflects potential revenues from the
anticipated approval of ORKAMBI in the
KALYDECO: Vertex today increased its guidance for 2016 revenues
of KALYDECO. The company now expects product revenues of
The change in KALYDECO guidance reflects:
- A continued increase in the number of patients initiating treatment with KALYDECO globally
- A reduced impact from the VX-661 Phase 3 program
2016 guidance for KALYDECO currently excludes any revenues related to
the potential approval of KALYDECO for people in the
Operating Expenses, Excluding Cost of Revenues (Combined Non-GAAP R&
Non-GAAP Financial Measures
In this press release, Vertex's financial results and financial guidance
are provided in accordance with accounting principles generally accepted
First Quarter Results
Consolidated Statements of Operations Data
(in thousands, except per share amounts)
Three Months Ended
|Product revenues, net||$||394,410||$||130,875|
|Costs and expenses:|
|Cost of product revenues (Note 1)||49,789||9,381|
|Research and development expenses||255,860||215,599|
|Sales, general and administrative expenses||105,214||85,860|
|Restructuring expenses (income)||687||(3,272||)|
|Total costs and expenses||412,410||310,494|
|Loss from operations||(14,330||)||(171,985||)|
|Interest expense, net||(20,698||)||(21,307||)|
|Other income (expenses), net||4,411||(5,113||)|
|Loss from operations before provision for income taxes||(30,617||)||(198,405||)|
|Provision for income taxes||5,485||299|
|(Income) loss attributable to noncontrolling interest||(5,529||)||98|
|Net loss attributable to Vertex||$||(41,631||)||$||(198,606||)|
|Amounts per share attributable to Vertex common shareholders:|
|Basic and diluted||$||(0.17||)||$||(0.83||)|
|Shares used in per share calculations:|
|Basic and diluted||243,831||239,493|
Reconciliation of GAAP to Non-GAAP Net Income/(Loss)
First Quarter Results
(in thousands, except per share amounts)
Three Months Ended
|GAAP loss attributable to Vertex||$||(41,631||)||$||(198,606||)|
|Stock-based compensation expense||55,472||57,384|
|Real estate restructuring costs and income (Note 2)||436||(3,567||)|
|HCV related revenues and costs (Note 3)||(1,436||)||(4,469||)|
|Other adjustments (Notes 4 and 5)||9,581||882|
|Non-GAAP net income (loss) attributable to Vertex||$||22,422||$||(148,376||)|
|Amounts per diluted share attributable to Vertex common shareholders:|
|Shares used in diluted per share calculations:|
Reconciliation of GAAP to Non-GAAP Revenues and Expenses
First Quarter Results
Three Months Ended
|GAAP total revenues||$||398,080||$||138,509|
|HCV related revenues (Note 3)||(851||)||(2,869||)|
|Other adjustments (Note 4)||(74||)||(200||)|
|Non-GAAP total revenues||$||397,155||$||135,440|
Three Months Ended
|GAAP cost of product revenues and royalty expenses||$||50,649||$||12,307|
|HCV related costs (Note 3)||(139||)||(1,596||)|
|Non-GAAP cost of product revenues and royalty expenses||$||50,510||$||10,711|
|GAAP research and development expenses||$||255,860||$||215,599|
|Stock-based compensation expense||(34,448||)||(38,217||)|
|HCV related costs (Note 3)||826||488|
|Other adjustments (Note 4)||(192||)||(696||)|
|Non-GAAP research and development expenses||$||222,046||$||177,174|
|GAAP sales, general and administrative expenses||$||105,214||$||85,860|
|Stock-based compensation expense||(21,024||)||(19,167||)|
|HCV related costs (Note 3)||32||2,904|
|Other adjustments (Note 4)||(543||)||(448||)|
|Non-GAAP sales, general and administrative expenses||$||83,679||$||69,149|
Combined non-GAAP R&
Three Months Ended
|GAAP interest expense, net and other expense, net||$||(16,287||)||$||(26,420||)|
|Other adjustments (Note 4)||211||—|
|Non-GAAP interest expense, net and other expense, net||$||(16,076||)||$||(26,420||)|
|GAAP provision for income taxes||$||5,485||$||299|
|Other adjustments (Note 4)||(3,063||)||63|
|Non-GAAP provision for income taxes||$||2,422||$||362|
Condensed Consolidated Balance Sheets Data
|Cash, cash equivalents and marketable securities||$||1,025,618||$||1,042,462|
|Restricted cash and cash equivalents (VIE) (Note 5)||76,273||78,910|
|Accounts receivable, net||181,878||177,639|
|Property and equipment, net||690,521||697,715|
|Intangible assets and goodwill||334,724||334,724|
|Liabilities and Shareholders' Equity|
|Deferred tax liability||112,259||110,439|
|Accrued restructuring expense||13,935||15,358|
|Senior secured term loan||295,822||295,159|
|Total liabilities and shareholders' equity||$||2,487,906||$||2,498,587|
|Common shares outstanding||247,287||246,307|
Note 1 : Cost of product revenues includes the second and final
Note 2: The company excludes from its non-GAAP income (loss)
attributable to Vertex restructuring expense (income). In the three
Note 3: In the three months ended
Note 4: In the three months ended
Note 5: The company consolidates the financial statements of two
of its collaborators as VIEs as of
ORKAMBI is a combination of lumacaftor and ivacaftor indicated for the treatment of cystic fibrosis (CF) in patients age 12 years and older who are homozygous for the F508del mutation in the CFTR gene. The efficacy and safety of ORKAMBI have not been established in patients with CF other than those homozygous for the F508del mutation.
Worsening of liver function, including hepatic encephalopathy, in patients with advanced liver disease has been reported in some patients with CF while receiving ORKAMBI.
Serious adverse reactions related to elevated transaminases have been reported in patients with CF receiving ORKAMBI and, in some instances, associated with concomitant elevations in total serum bilirubin.
Respiratory events (e.g., chest discomfort, shortness of breath, and chest tightness) were observed more commonly in patients during initiation of ORKAMBI compared to those who received placebo. Clinical experience in patients with percent predicted FEV1 < 40 is limited, and additional monitoring of these patients is recommended during initiation of therapy.
Co-administration of ORKAMBI with sensitive CYP3A substrates or CYP3A substrates with a narrow therapeutic index is not recommended as ORKAMBI may reduce their effectiveness. ORKAMBI may substantially decrease hormonal contraceptive exposure, reducing their effectiveness and increasing the incidence of menstruation-associated adverse reactions. Co-administration with strong CYP3A inducers is not recommended as they may reduce the therapeutic effectiveness of ORKAMBI.
Abnormalities of the eye lens (cataracts) have been reported in pediatric patients treated with ivacaftor, a component of ORKAMBI.
The most common adverse reactions associated with ORKAMBI include shortness of breath, sore throat, nausea, diarrhea, upper respiratory tract infection, fatigue, chest tightness, increased blood creatinine phosphokinase, rash, flatulence, runny nose, and influenza.
Please see the full prescribing information for ORKAMBI.
KALYDECO is a cystic fibrosis transmembrane conductance regulatory (CFTR) potentiator indicated for the treatment of cystic fibrosis (CF) in patients age 2 years and older who have one of the following mutations in the CFTR gene: G551D, G1244E, G1349D, G178R, G551S, S1251N, S1255P, S549N, S549R or R117H.
KALYDECO 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 KALYDECO in children with CF younger than 2 years of age have not been studied. The use of KALYDECO 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 KALYDECO.
Use of KALYDECO with medicines that are strong CYP3A inducers substantially decreases exposure of KALYDECO and may diminish effectiveness. Therefore, co-administration is not recommended. The dose of KALYDECO 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 KALYDECO.
The most common side effects associated with KALYDECO 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.
Please see the full prescribing information for KALYDECO.
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
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,
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