Vertex Reports Third Quarter 2012 Financial Results and Recent Progress in Development Programs
-Third quarter 2012 total revenues of
-Cystic Fibrosis: Three ongoing Phase 3 label expansion studies for ivacaftor monotherapy; pivotal program for VX-809 and ivacaftor combination expected to begin in early 2013-
-Hepatitis C: Planned start of first all-oral Phase 2 study of VX-135
by the end of 2012; agreements with GlaxoSmithKline and
Vertex reported total revenues of approximately
"In the third quarter, we made significant progress across our broad
pipeline of potential medicines," said
"Importantly, we are advancing our business while keeping a focus on financial discipline and prioritization to allow us to continue investing in key research and development programs that may produce transformative medicines for patients in the years to come," concluded Dr. Leiden.
Cystic Fibrosis (CF)
-
Ongoing global launch of KALYDECO: KALYDECO (ivacaftor) is
approved in the U.S. and in all 27 EU countries for people with cystic
fibrosis ages 6 and older who have at least one copy of the G551D
mutation in the cystic fibrosis transmembrane conductance regulator (CFTR) gene.
Currently, Vertex is working with individual countries in
Europe to make KALYDECO available to eligible patients as soon as possible. Vertex has submitted marketing applications for KALYDECO inCanada andAustralia that are currently under review with the respective regulatory agencies. -
Efforts to help more CF patients with ivacaftor monotherapy: There
are three Phase 3 label expansion trials and one Phase 2
proof-of-concept study underway for ivacaftor monotherapy:
- A Phase 3 study of ivacaftor is ongoing in people with CF ages 6 and older who have at least one copy of the R117H mutation. Approximately 3 percent of people with CF in the U.S. have at least one R117H mutation.
- A Phase 3 study of ivacaftor is ongoing in people with CF ages 6 and older who have at least one non-G551D CFTR gating mutation. Approximately 1 percent of people with CF in the U.S. have at least one non-G551D gating mutation.
- A Phase 3 study of ivacaftor was recently initiated in children with CF ages 2 to 5 who have a gating mutation, with enrollment targeted to begin by the end of 2012.
- A Phase 2 proof-of-concept study is underway evaluating ivacaftor in people with clinical evidence of residual CFTR function. This is the first study to evaluate the efficacy of ivacaftor based on a person's clinical symptoms and characteristics, or phenotype, rather than solely on their CFTR mutation, or genotype. Between 5 and 10 percent of people with CF in the U.S. may have residual CFTR function.
- Combination therapy for people with two copies of the F508del mutation: Based on data from the second part of an ongoing Phase 2 study and pending discussions with regulatory agencies, Vertex is preparing to start a pivotal program in early 2013 evaluating combination therapy with VX-809 and ivacaftor in people ages 12 and older with two copies of the F508del mutation, the most common form of cystic fibrosis. A third part (Cohort 3) of the Phase 2 study is evaluating the pharmacokinetics, safety and tolerability of a twice-daily (q12h) combination of VX-809 (400mg) and ivacaftor (250mg). Cohort 3 is fully enrolled, and Vertex expects to use data from this part of the study to support the pivotal program for VX-809 and ivacaftor. Additional data are expected in the first half of 2013 from a Phase 2 study of combination therapy with VX-661, another CFTR corrector, and ivacaftor.
-
Research to identify additional CF treatment regimens: Vertex
has an active and ongoing research program that has identified
next-generation correctors. This research is being conducted as part
of the company's collaboration with
Cystic Fibrosis Foundation Therapeutics, Inc. and is focused on the accelerated discovery and development of correctors that could play a role in a variety of future combination treatments, including a dual corrector approach and other combinations with ivacaftor.
Hepatitis C
-
Development-stage agreements: Vertex announced earlier today
that it has entered into two separate, non-exclusive agreements with
GSK andJanssen Pharmaceuticals, Inc. to evaluate multiple all-oral treatment regimens for people with genotype 1 hepatitis C. The collaboration with GSK will evaluate Vertex's nucleotide analogue HCV polymerase inhibitor VX-135 in combination with GSK's NS5A inhibitor GSK2336805, and the collaboration with Janssen will evaluate VX-135 in combination with Janssen's protease inhibitor simeprevir (TMC435). Additional details were provided today in separate press releases. -
Additional all-oral studies with VX-135: Based on positive
viral kinetic data for VX-135 announced in the third quarter, Vertex
plans to conduct 12-week Phase 2 all-oral studies of VX-135, including
a study in combination with ribavirin and a study in combination with
telaprevir, pending regulatory approval. The study in combination with
ribavirin is expected to begin by the end of 2012, followed by the
study with telaprevir in early 2013. Data on VX-135 will be presented
at The Liver Meeting®, the 63rd Annual Meeting of the
American Association for the Study of Liver Diseases (AASLD) inNovember 2012 . -
Telaprevir twice-daily dosing data: Data from a study examining
twice-daily dosing (BID) for telaprevir will be presented at the
upcoming AASLD annual meeting in
Boston . The results demonstrated that twice-daily dosing of telaprevir in combination with peginterferon alfa and ribavirin compared to dosing telaprevir every eight hours, the currently approved dosing schedule, achieved similar sustained virological response (SVR12) rates, or viral cure rates, thereby meeting the study's primary objective of non-inferiority. Adverse events were generally similar between both arms of the study and consistent with previous studies. Vertex plans to submit data supporting this new dosing regimen to theU.S. Food and Drug Administration (FDA) in 2013 for potential inclusion in the telaprevir label in the U.S.
Pipeline Programs
-
Phase 2b study of VX-509 underway in rheumatoid arthritis:
Enrollment is ongoing in the U.S. and
Europe in a Phase 2b 350-person study of VX-509, an oral, selective JAK3 inhibitor, being evaluated in combination with methotrexate for people with moderate to severe rheumatoid arthritis (RA). Vertex expects to start additional studies of VX-509 in other immune-mediated inflammatory diseases in 2013. - Ongoing Phase 2 study of VX-787 in influenza: Vertex expects final data from an ongoing Phase 2 proof-of-concept study of VX-787 in experimental influenza by the end of 2012. VX-787 is an investigational medicine that is designed to treat influenza A, including recent H1N1 (pandemic) and H5N1 (avian) influenza strains.
Third Quarter 2012 Financial Results
Total Revenues: Total revenues were
-
Net Product Revenues from INCIVEK: Net product revenues from
INCIVEK were
$254.3 million , compared with$419.6 for the third quarter of 2011. -
Net Product Revenues from KALYDECO: Net product revenues from
KALYDECO were
$49.2 million . Because KALYDECO was approved inJanuary 2012 , there were no net product revenues from KALYDECO for the third quarter of 2011. -
Royalty Revenues: Vertex recognized
$25.6 million in royalty revenues, including$20.0 million in INCIVO royalty revenues from our collaborator Janssen, compared to$8.5 for the third quarter of 2011. INCIVO was approved inEurope inSeptember 2011 . -
Collaborative Revenues: Vertex recognized
$6.9 million in collaborative revenues, compared to$231.1 million for the third quarter of 2011, which included an aggregate of$200.0 million in milestone revenue from Janssen related to the approval and launch of INCIVO inEurope .
Cost of Product Revenues: Cost of product revenues was
Research and Development (R&D) Expenses: R&D expenses were
Sales, general and administrative (SG&A) expenses: SG&A
expenses were
GAAP Net Income (Loss) Attributable to Vertex: Vertex's GAAP net
loss was
Non-GAAP Net Income Attributable to Vertex: Vertex's non-GAAP net
income was
Cash Position: As of
2012 Financial Guidance
This section contains forward-looking guidance about the financial
outlook for
Full-Year INCIVEK Revenues: Vertex is today reiterating its
guidance for full-year 2012 INCIVEK net revenues to be in the range of
Total Operating Expenses: Vertex is also reiterating its guidance
for 2012 total operating expenses, excluding cost of revenues,
stock-based compensation expense and Alios expenses related to the
accounting for the collaboration with Vertex, to be in the range of
Non-GAAP Financial Measures
In this press release, Vertex's financial results and financial guidance
are provided both in accordance with accounting principles generally
accepted in
|
|
||||||||
|
Third Quarter and Nine Month Results |
||||||||
|
Consolidated Statements of Operations Data |
||||||||
|
(in thousands, except per share amounts) |
||||||||
|
(unaudited) |
||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||
| 2012 | 2011 | 2012 | 2011 | |||||
| Revenues: | ||||||||
| Product revenues, net |
|
|
|
|
||||
| Royalty revenues | 25,586 | 8,539 | 98,047 | 24,610 | ||||
| Collaborative revenues (Note 2) | 6,919 | 231,066 | 42,852 | 328,546 | ||||
| Total revenues | 336,006 | 659,200 | 1,193,048 | 847,286 | ||||
| Costs and expenses: | ||||||||
| Cost of product revenues (Note 3) | 30,680 | 35,285 | 161,147 | 40,689 | ||||
| Royalty expenses | 7,856 | 3,121 | 31,023 | 9,689 | ||||
| Research and development expenses (R&D) | 200,161 | 189,052 | 593,076 | 521,268 | ||||
| Sales, general & administrative expenses (SG&A) |
97,684 |
110,654 |
326,344 |
278,840 |
||||
| Restructuring expense (credit) | 696 | (419) | 1,650 | 1,082 | ||||
| Intangible asset impairment charge (Note 4) | — | 105,800 | — | 105,800 | ||||
| Total costs and expenses | 337,077 | 443,493 | 1,113,240 | 957,368 | ||||
| Income (loss) from operations | (1,071) | 215,707 | 79,808 | (110,082) | ||||
| Net interest expense (Note 2) | (4,041) | (6,982) | (11,417) | (24,341) | ||||
| Change in fair value of derivative instruments (Note 2) |
— |
(8,115) |
— |
(15,933) |
||||
| Income (loss) before provision for (benefit from) income taxes | (5,112) | 200,610 | 68,391 | (150,356) | ||||
| Provision for (benefit from) income taxes (Note 4) | 21,355 | (27,842) | 41,450 | (3,394) | ||||
| Net income (loss) | (26,467) | 228,452 | 26,941 | (146,962) | ||||
|
Net loss (income) attributable to noncontrolling interest (Note 1) |
(31,076) |
(7,342) |
(57,825) |
17,907 |
||||
| Net income (loss) attributable to Vertex |
|
|
|
|
||||
| Net income (loss) per share attributable to Vertex common shareholders: | ||||||||
| Basic |
|
|
|
|
||||
| Diluted |
|
|
|
|
||||
| Shares used in per share calculations: | ||||||||
| Basic | 213,767 | 206,002 | 211,053 | 204,262 | ||||
| Diluted | 213,767 | 219,349 | 211,053 | 204,262 | ||||
|
Reconciliation of GAAP to |
||||||||||||||||
|
(in thousands, except per share amounts) |
||||||||||||||||
|
(unaudited) |
||||||||||||||||
|
Three Months Ended |
Adjustments |
|||||||||||||||
|
GAAP |
Alios |
Stock-based |
Inventory |
September |
Intangible |
Restructuring |
Non-GAAP | |||||||||
| Income (loss) from operations |
|
|
|
$— |
$— |
$— |
|
|
||||||||
| Other income and expenses | (4,041) | 466 | — |
— |
— | — | — | (3,575) | ||||||||
| Income (loss) before provision for (benefit from) income taxes |
(5,112) |
5,090 |
27,484 |
— |
— | — | 696 | 28,158 | ||||||||
| Provision for (benefit from) income taxes | 21,355 | (21,394) | — |
— |
— | — | — | (39) | ||||||||
| Net income (loss) | (26,467) | 26,484 | 27,484 | — | — | 696 | 28,197 | |||||||||
|
Net loss (income) attributable to noncontrolling interest (Alios) |
(31,076) |
31,076 |
— |
— |
— |
— |
— | — | ||||||||
| Net income (loss) attributable to Vertex |
|
|
|
$— |
$— | $— |
|
|
||||||||
| Net income (loss) per diluted share attributable to Vertex common shareholders (Note 5) |
|
|
||||||||||||||
|
Three Months Ended |
Adjustments |
|||||||||||||||
| GAAP |
Alios |
Stock-based |
Inventory |
September |
Intangible |
Restructuring |
Non-GAAP | |||||||||
| Income (loss) from operations |
|
|
|
$— |
|
|
|
|
||||||||
| Other income and expenses | (15,097) | — | — | — | 11,075 | — | — | (4,022) | ||||||||
| Income (loss) before provision for (benefit from) income taxes | 200,610 | 5,258 | 28,886 | — | (188,925) | 105,800 | (419) | 151,210 | ||||||||
| Provision for (benefit from) income taxes | (27,842) | (4,850) | — | — | — | 32,692 | — | — | ||||||||
| Net income (loss) | 228,452 | 10,108 | 28,886 | — | (188,925) | 73,108 | (419) | 151,210 | ||||||||
|
Net loss (income) attributable to noncontrolling interest (Alios) |
(7,342) |
7,342 |
— |
— |
— |
— |
— | — | ||||||||
| Net income (loss) attributable to Vertex |
|
|
|
$— |
|
|
|
|
||||||||
| Net income (loss) per diluted share attributable to Vertex common shareholders (Note 5) |
|
|
||||||||||||||
|
Reconciliation of GAAP to Non-GAAP Financial Information-Nine Month |
||||||||||||||||
|
(in thousands, except per share amounts) |
||||||||||||||||
|
(unaudited) |
||||||||||||||||
|
Nine Months Ended |
Adjustments |
|||||||||||||||
| GAAP |
Alios |
Stock-based |
Inventory |
September |
Intangible Asset |
Restructuring |
Non-GAAP |
|||||||||
|
Income (loss) from operations |
|
|
|
|
$— | $— |
|
|
||||||||
| Other income and expenses | (11,417) | 225 | — | — | — | — | — | (11,192) | ||||||||
| Income (loss) before provision for (benefit from) income taxes |
68,391 |
14,581 | 86,280 |
78,000 |
— |
— |
1,650 | 248,902 | ||||||||
| Provision for (benefit from) income taxes | 41,450 | (40,354) | — | 1,239 | — | — | — | 2,335 | ||||||||
| Net income (loss) | 26,941 | 54,935 | 86,280 | 76,761 | — | — | 1,650 | 246,567 | ||||||||
|
Net loss (income) attributable to noncontrolling interest (Alios) |
(57,825) |
57,825 |
— | — | — |
— |
— | — | ||||||||
| Net income (loss) attributable to Vertex |
|
|
|
|
$— | $— |
|
|
||||||||
| Net income (loss) per diluted share attributable to Vertex common shareholders (Note 5) |
|
|
||||||||||||||
|
Nine Months Ended |
Adjustments |
|||||||||||||||
|
GAAP |
Alios |
Stock-based |
Inventory |
September |
Intangible Asset |
Restructuring |
Non-GAAP | |||||||||
| Income (loss) from operations |
|
|
|
$ — |
|
|
|
|
||||||||
| Other income and expenses | (40,274) | — | — | — | 29,690 | — | — | (10,584) | ||||||||
| Income (loss) before provision for (benefit from) income taxes | (150,356) | 6,059 | 88,644 | — | (220,310) | 105,800 | 1,082 | (169,081) | ||||||||
| Provision for (benefit from) income taxes | (3,394) | (29,298) | — | — | — | 32,692 | — | — | ||||||||
| Net income (loss) | (146,962) | 35,357 | 88,644 | — | (220,310) | 73,108 | 1,082 | (169,081) | ||||||||
|
Net loss (income) attributable to noncontrolling interest (Alios) |
17,907 |
(17,907) |
— |
— |
— | — | — | — | ||||||||
| Net income (loss) attributable to Vertex |
|
|
|
$— |
|
|
|
|
||||||||
| Net income (loss) per diluted share attributable to Vertex common shareholders (Note 5) |
|
|
||||||||||||||
|
Condensed Consolidated Balance Sheets Data |
||||
|
(in thousands) |
||||
|
(unaudited) |
||||
|
September 30, |
December 31, |
|||
|
Assets |
|
|||
| Cash, cash equivalents and marketable securities |
|
|
||
| Restricted cash and cash equivalents (Alios) (Note 1) | 74,954 | 51,878 | ||
| Accounts receivable, net | 139,629 | 183,135 | ||
| Inventories (Note 3) | 86,275 | 112,430 | ||
| Other current assets | 35,123 | 14,889 | ||
| Property and equipment, net | 347,249 | 133,176 | ||
| Restricted cash | 32,166 | 34,090 | ||
| Intangible assets (Note 4) | 663,500 | 663,500 | ||
| Goodwill (Note 4) | 30,992 | 30,992 | ||
| Other non-current assets | 10,393 | 11,268 | ||
|
Total assets |
|
|
||
| Liabilities and Shareholders' Equity | ||||
| Other liabilities |
|
|
||
| Accrued restructuring expense | 24,155 | 26,313 | ||
| Deferred tax liability (Note 4) | 279,466 | 243,707 | ||
| Deferred revenues | 130,929 | 163,132 | ||
| Convertible notes (due 2015) | 400,000 | 400,000 | ||
| Noncontrolling interest (Alios) (Note 1) | 237,013 | 178,669 | ||
| Shareholders' equity (Vertex) | 1,027,733 | 786,843 | ||
| Total liabilities and shareholders' equity |
|
|
||
| Common shares outstanding | 216,342 | 209,304 | ||
Note 1: The company has consolidated the financial statements of
its collaborator Alios BioPharma, Inc., as of September 30, 2012 and
December 31, 2011, for the three and nine months ended
Note 2: In the three and nine months ended
Note 3: In the second quarter of 2012, the company recorded
within cost of product revenues a
Note 4: The intangible assets, the goodwill and the deferred tax
liability reflected in the Condensed Consolidated Balance Sheets Data
relate to the company's acquisition of
In the third quarter of 2011, the company recorded an impairment charge
of
Note 5: Shares used in Non-GAAP net income (loss) per diluted
share attributable to Vertex common shareholders were 217,797,000 and
219,349,000 for the three months ended
About Vertex
Vertex creates new possibilities in medicine. Our team discovers, develops and commercializes innovative therapies so people with serious diseases can lead better lives.
Vertex scientists and our collaborators are working on new medicines to cure or significantly advance the treatment of hepatitis C, cystic fibrosis, rheumatoid arthritis and other life-threatening diseases.
Founded more than 20 years ago in
Vertex's press releases are available at www.vrtx.com.
INDICATION AND IMPORTANT SAFETY INFORMATION FOR KALYDECO (ivacaftor)
KALYDECO (150mg 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.
KALYDECO is not for use in people with CF due to other mutations in the CFTR gene. It is not effective in CF patients with two copies of the F508del mutation (F508del/F508del) in the CFTR gene.
High liver enzymes (transaminases, ALT and AST) have been reported in patients receiving KALYDECO. It is recommended that ALT and AST be assessed prior to initiating KALYDECO, 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 KALYDECO dosing. Moderate transaminase elevations are common in subjects with CF. Overall, the incidence and clinical features of transaminase elevations in clinical trials was similar between subjects in the KALYDECO and placebo treatment groups. In the subset of patients with a medical history of elevated transaminases, increased ALT or AST have been reported more frequently in patients receiving KALYDECO compared to placebo.
Use of KALYDECO 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 KALYDECO, which may diminish effectiveness. Therefore, co-administration is not recommended.
The dose of KALYDECO must be adjusted when concomitantly used with potent and moderate CYP3A inhibitors.
KALYDECO can cause serious adverse reactions including abdominal pain and high liver enzymes in the blood. The most common side effects associated with KALYDECO 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 KALYDECO. A list of the adverse reactions can be found in the full product labeling for each country where KALYDECO is approved. Patients should tell their healthcare providers about any side effect that bothers them or doesn't go away.
Please see full U.S. Prescribing Information for KALYDECO at www.KALYDECO.com and the EU Summary of Product Characteristics for KALYDECO at http://goo.gl/N3Tz4.
INDICATION AND IMPORTANT SAFETY INFORMATION FOR INCIVEK (telaprevir)
Indication
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 should always be taken in combination with peginterferon alfa and ribavirin. 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. Patients must use two forms of effective birth control during treatment and for the 6 months after treatment with these medicines. Hormonal forms of birth control, including birth control pills, vaginal rings, implants or injections, 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 non-prescription medicines, vitamins and herbal supplements.
INCIVEK can cause serious side effects including skin reactions, rash and anemia that can be severe. The most common side effects of INCIVEK include itching, nausea, diarrhea, vomiting, anal or rectal problems, 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 providers about any side effect that bothers them or doesn't go away.
Please see full Prescribing Information for INCIVEK including the Medication Guide, available at www.INCIVEK.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 third and fourth paragraphs
of the press release, the information provided in the two paragraphs
following the statement "This section contains forward-looking guidance
about the financial outlook for
Conference Call Information
Vertex will host a conference call and webcast today,
To listen to the live call on the telephone, dial 1-866-501-1537 (
The conference ID number for the live call and replay is 38809529.
The call will be available for replay via telephone commencing
Following the live webcast, an archived version will be available on
Vertex's website until
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