Vertex Reports Fourth Quarter and Full-Year 2011 Financial Results

Vertex Reports Fourth Quarter and Full-Year 2011 Financial Results

 


-Successful launch of INCIVEK (telaprevir) for hepatitis C and recent approval of KALYDECO (ivacaftor) for cystic fibrosis position Vertex for continued growth, earnings and cashflow-

CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) today reported consolidated financial results for the fourth quarter and full-year ended December 31, 2011.

"The successful launch of INCIVEK in hepatitis C and rapid approval of KALYDECO for people with a specific type of cystic fibrosis underscore our ability to discover and develop breakthrough new medicines and to bring them to patients," said Jeffrey Leiden, M.D., Ph.D., President and Chief Executive Officer of Vertex. "We will continue to advance our pipeline of eight other potential medicines and expect to generate proof-of-concept data for many of these programs throughout 2012. With two approved medicines and our broad pipeline, Vertex is well-positioned to become a global business focused on creating additional medicines for people with serious diseases."

Development Program Updates

 On January 8, 2012, Vertex provided a comprehensive update on the status of its development programs. The company today provided the following additional updates:

  • FDA Approval of KALYDECO: On Tuesday, Vertex announced that the U.S. Food and Drug Administration (FDA) approved KALYDECOTM (ivacaftor), the first medicine to treat the underlying cause of cystic fibrosis (CF). KALYDECO was approved 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. The approval of KALYDECO was one of the fastest approvals ever by the FDA and marks the second approval of a new medicine from Vertex within the past nine months. Vertex today announced it has begun shipping KALYDECO to pharmacies in the United States.
  • Global Availability of INCIVEK for Hepatitis C: INCIVEK®(telaprevir) is now approved in the United States for certain adults with hepatitis C and in multiple countries outside the United States. Vertex has exclusive rights to INCIVEK in the United States and Canada. Vertex's collaborator, Janssen, is marketing telaprevir in Europe as INCIVO®. INCIVO is now available in the U.K., Germany, France, Sweden, Austria, Finland, Denmark, Switzerland and Norway. Vertex's collaborator Mitsubishi Tanabe Pharma has rights in Japan, where telaprevir is being marketed as TELAVIC®.
  • Study of Second Corrector VX-661 Underway for Cystic Fibrosis: Vertex recently initiated a Phase 2 study of VX-661, a second CFTR corrector. The study will evaluate VX-661 as monotherapy followed by dosing of VX-661 in combination with KALYDECO in people with two copies of the F508del mutation. According to the 2010 Cystic Fibrosis Foundation Patient Registry Annual Data Report, approximately 48 percent of the total CF patient population in the United States have two copies of the F508del mutation and an additional 40 percent of the total CF patient population have one copy of the F508del mutation. A Phase 2 study of the CFTR corrector VX-809 dosed in combination with KALYDECO is also ongoing. Data from the study with VX-809 are expected mid-year, followed by data from the study with VX-661 later in 2012.
  • Other Ongoing and Planned Clinical Studies for 2012:◦Cystic Fibrosis: Vertex plans to conduct three additional studies of KALYDECO that will enroll children with CF as young as two years of age and people with CF who have certain CFTR mutations that were not evaluated in the previous Phase 3 studies.

◦Hepatitis C: Vertex expects to have on-treatment and SVR4 data from the all-oral, interferon-free arms (VX-222, INCIVEK and ribavirin) of the Phase 2 ZENITH study in the first quarter of 2012. Vertex expects to have the first data from Phase 1 safety and 7-day viral kinetic studies of the nucleotide analogues ALS-2200 and ALS-2158 in healthy volunteers and people with genotype 1 hepatitis C in the second quarter of 2012. Data from studies in other genotypes are expected later in 2012. Following these Phase 1 studies, Vertex plans to conduct Phase 2 studies that are expected to evaluate combination regimens of ALS-2200 or ALS-2158 with INCIVEK or VX-222, potential dual nucleotide regimens and other interferon-free combination regimens that may also include ribavirin.
◦Rheumatoid Arthritis: Pending final regulatory feedback, Vertex plans to initiate a global Phase 2b study of VX-509 in people with moderate to severe rheumatoid arthritis that will evaluate once and twice-daily dosing in combination with methotrexate.
◦Influenza: Following the completion of Phase 1 studies in healthy volunteers, Vertex plans to begin a Phase 2a study of VX-787 in influenza.

 


Fourth Quarter 2011 Financial Results

Total Revenues: Total revenues for the fourth quarter of 2011 were $563.3 million, compared with $65.5 million in total revenues for the fourth quarter of 2010. The increase in total revenues for the fourth quarter of 2011 was primarily driven by INCIVEK net revenues of $456.8 million and a $65.0 million milestone payment from Mitsubishi Tanabe related to approval and commercialization of TELAVIC in Japan.

Net Product Revenues from INCIVEK: Net product revenues for INCIVEK for the fourth quarter of 2011 were $456.8 million. Vertex reported $419.6 million in net product revenues for INCIVEK in the third quarter of 2011.

Research and Development (R&D) Expenses: R&D expenses for the fourth quarter of 2011 were $186.4 million, including $18.2 million of Vertex stock-based compensation expense and $1.8 million in Alios expenses related to the accounting for the collaboration with Vertex, compared to $168.9 million for the fourth quarter of 2010, including $16.2 million of stock-based compensation expense. The increase in Vertex's R&D investment is principally due to the company's continued investment in its R&D pipeline, including preparation for the initiation of multiple clinical trials planned for 2012.

Sales, general and administrative (SG&A) expenses: SG&A expenses for the fourth quarter of 2011 were $121.9 million, including $11.1 million of stock-based compensation expense and $1.3 million in Alios expenses related to the accounting for the collaboration with Vertex, compared to $62.5 million for 2010, including $7.4 million of stock-based compensation expense. This increase reflects the expansion of the company's commercial organization to support both INCIVEK for the treatment of hepatitis C and KALYDECO for the treatment of cystic fibrosis and costs related to the commercial launch of INCIVEK.

GAAP Net Income (Loss) Attributable to Vertex: Vertex's GAAP net income for the fourth quarter of 2011 was $158.6 million, or $0.74 per diluted share. The GAAP net loss for 2010 was $180.4 million, or $0.90 per diluted share.

Non-GAAP Net Income (Loss) Attributable to Vertex: Vertex's non-GAAP net income for the fourth quarter of 2011, was $185.2 million, or $0.86 per diluted share. The non-GAAP net loss for the fourth quarter of 2010 was $148.5 million, or $0.74 per diluted share.

Cash Position: At December 31, 2011, Vertex had $968.9 million in cash, cash equivalents and marketable securities.

Full-Year 2011 Financial Results

Total Revenues: Total revenues for 2011 were $1.4 billion, compared with $143.4 million in total revenues for 2010. The increase in total revenues was primarily driven by 2011 INCIVEK net revenues of $950.9 million and approximately $315.0 million in collaborative milestone payments, including $250.0 million in collaborative milestone payments from Janssen and a $65.0 million milestone payment from Mitsubishi Tanabe related to approval and commercialization of TELAVIC in Japan.

Net Product Revenues from INCIVEK: Following the approval of INCIVEK on May 23, 2011, Vertex's 2011 net product revenues for INCIVEK were $950.9 million.

Research and Development (R&D) Expenses: R&D expenses for 2011 were $707.7 million, including $75.4 million of stock-based compensation expense and $5.2 million in Alios expenses related to the accounting for the collaboration with Vertex, compared to $637.4 million for 2010, including $65.2 million of stock-based compensation expense. The increase in Vertex's R&D investment is principally due to the company's continued investment in its R&D pipeline, including preparation for the initiation of multiple clinical trials planned for 2012.

Sales, general and administrative (SG&A) expenses: SG&A expenses for 2011 were $400.7 million, including $42.6 million of stock-based compensation expense and $4.0 million in Alios expenses related to the accounting for the collaboration with Vertex, compared to $187.8 million for 2010, including $25.9 million of stock-based compensation expense. This increase reflects the expansion of the company's commercial organization to support both INCIVEK for the treatment of hepatitis C and KALYDECO for the treatment of cystic fibrosis and costs related to the commercial launch of INCIVEK.

GAAP Net Income (Loss) Attributable to Vertex: Vertex's GAAP net income for 2011 was $29.6 million, or $0.14 per diluted share. The GAAP net loss for 2010 was $754.6 million, or $3.77 per diluted share.

Non-GAAP Net Income (Loss) Attributable to Vertex: Vertex's non-GAAP net income for 2011 was $16.1 million, or $0.08 per diluted share, compared to a non-GAAP net loss of $605.7 million, or $3.02 per diluted share, for 2010.

2012 Financial Guidance

 "With the launch of INCIVEK and KALYDECO, Vertex is positioned to deliver significant earnings while we continue to invest to support the growth of our business," said Ian Smith, Executive Vice President and Chief Financial Officer for Vertex. "Throughout 2012, we will maintain a focus on balancing our revenues with the investment required to drive continued innovation in our pipeline and cashflow for our business so that we can discover and develop new medicines for patients and deliver value for our shareholders."

This section contains forward-looking guidance about the financial outlook for Vertex Pharmaceuticals.

Full-Year INCIVEK Revenues: Vertex expects that full-year 2012 INCIVEK net revenues will be in the range of $1.5 billion to $1.7 billion.

Total Operating Expenses: Vertex expects 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 $1.03 billion to $1.13 billion. The principal operating expenses are:

  • R&D Expenses: Vertex expects that full-year 2012 R&D expenses will be in the range of $690 million to $760 million. The principal R&D expenses relate to development activities for studies of potential all-oral, interferon-free regimens for hepatitis C, additional studies of KALYDECO, both as monotherapy and in combination with VX-809 and VX-661, development activities for VX-509 in rheumatoid arthritis and VX-787 for the treatment of influenza, and continued development investment in INCIVEK post-marketing commitment studies.

•SG&A Expense: Vertex expects that full-year 2012 SG&A expense will be in the range of $340 million to $370 million. The SG&A expense is primarily driven by continued sales and marketing support for INCIVEK in hepatitis C and activities related to the launch and commercial support for KALYDECO for cystic fibrosis.

 

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 the United States (GAAP) and using certain non-GAAP financial measures. In particular, Vertex provides its fourth quarter and full-year 2011 net income and fourth quarter and full-year 2010 net loss excluding stock-based compensation expense, restructuring expense (credit), any revenues and expenses related to certain September 2009 financial transactions, any intangible asset impairment charge, net of tax, commercial milestone payments, and items related to Vertex's collaboration with Alios. 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 its financial position. Management also uses these non-GAAP financial measures to establish budgets and operational goals that are communicated internally and externally, and to manage the company's business and to evaluate its performance. A reconciliation of the other non-GAAP financial results to GAAP financial results is included in the attached financial statements.

Vertex Pharmaceuticals Incorporated
Fourth Quarter and Twelve Months Results
Consolidated Statements of Operations Data
(in thousands, except per share amounts)
(unaudited)

 

 

 

 

 


Three Months Ended
December 31,

 

 


Twelve Months Ended
December 31,

 

 

 

 

 

2011

 

 

2010

 

 

2011

 

 

2010

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues, net

 

 

 

$

456,759

 

 

 

$

---

 

 

 

$

950,889

 

 

 

$

---

 

 

Royalty revenues

 

 

 

 

25,405

 

 

 

 

8,402

 

 

 

 

50,015

 

 

 

 

30,244

 

 

Collaborative revenues

 

 

 

 

81,176

 

 

 

 

57,122

 

 

 

 

409,722

 

 

 

 

113,126

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

 

 

 

563,340

 

 

 

 

65,524

 

 

 

 

1,410,626

 

 

 

 

143,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product revenues

 

 

 

 

22,936

 

 

 

 

---

 

 

 

 

63,625

 

 

 

 

---

 

 

Royalty expenses

 

 

 

 

7,191

 

 

 

 

3,049

 

 

 

 

16,880

 

 

 

 

12,730

 

 

Research and development expenses (R&D)

 

 

 

 

186,438

 

 

 

 

168,888

 

 

 

 

707,706

 

 

 

 

637,416

 

 

Sales, general & administrative expenses (SG&A)

 

 

 

 

121,881

 

 

 

 

62,478

 

 

 

 

400,721

 

 

 

 

187,800

 

 

Restructuring expense (credit)

 

 

 

 

992

 

 

 

 

(2,257

)

 

 

 

2,074

 

 

 

 

1,501

 

 

Intangible asset impairment charge (Note 3)

 

 

 

 

---

 

 

 

 

---

 

 

 

 

105,800

 

 

 

 

---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total costs and expenses

 

 

 

 

339,438

 

 

 

 

232,158

 

 

 

 

1,296,806

 

 

 

 

839,447

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

 

 

223,902

 

 

 

 

(166,634

)

 

 

 

113,820

 

 

 

 

(696,077

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest expense (Note 2)

 

 

 

 

(12,233

)

 

 

 

(7,163

)

 

 

 

(36,574

)

 

 

 

(17,320

)

 

Change in fair value of derivative instruments (Note 2)

 

 

 

 

(868

)

 

 

 

(6,595

)

 

 

 

(16,801

)

 

 

 

(41,229

)

 

Income (loss) before provision for income taxes

 

 

 

 

210,801

 

 

 

 

(180,392

)

 

 

 

60,445

 

 

 

 

(754,626

)

 

Provision for income taxes (Note 3)

 

 

 

 

22,660

 

 

 

 

---

 

 

 

 

19,266

 

 

 

 

---

 

 

Net income (loss)

 

 

 

 

188,141

 

 

 

 

(180,392

)

 

 

 

41,179

 

 

 

 

(754,626

)

 

Net income attributable to noncontrolling interest (Note 1)

 

 

 

 

29,512

 

 

 

 

---

 

 

 

 

11,605

 

 

 

 

---

 

 

Net income (loss) attributable to Vertex

 

 

 

$

158,629

 

 

 

$

(180,392

)

 

 

$

29,574

 

 

 

$

(754,626

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to Vertex common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

$

0.76

 

 

 

$

(0.90

)

 

 

$

0.14

 

 

 

$

(3.77

)

 

Diluted

 

 

 

$

0.74

 

 

 

$

(0.90

)

 

 

$

0.14

 

 

 

$

(3.77

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

206,758

 

 

 

 

201,355

 

 

 

 

204,891

 

 

 

 

200,402

 

 

Diluted

 

 

 

 

217,602

 

 

 

 

201,355

 

 

 

 

208,807

 

 

 

 

200,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Reconciliation of GAAP to Non-GAAP Financial Information-Fourth Quarter
(in thousands, except per share amounts)
(unaudited)

 


Three Months Ended December 31, 2011
 

 

 

 

 

 

Adjustments

 

 

 

 

 

  

 

 

 

 

 

GAAP

  

 


Alios
Transaction
 
 

 


Stock-based
Compensation
Expense
 
 

 


September 2009
Financial
Transactions
 
 

 


Mitsubishi Tanabe
Milestone
 
 

 


Restructuring
Expense
 
 

 

Non-GAAP

 

 Revenues

 

 

 

$

563,340

 

 

 

$

-

 

 

 

$

-

 

 

 

$

-

 

 

$

(65,000

)

 

 

$

-

 

 

 

$

498,340

 

 

Operating costs and expenses

 

 

 

 

339,438

 

 

 

 

(3,119

)

 

 

 

(29,278

)

 

 

 

-

 

 

 

-

 

 

 

 

(992

)

 

 

 

306,049

 

 

Income from operations

 

 

 

 

223,902

 

 

 

 

3,119

 

 

 

 

29,278

 

 

 

 

-

 

 

 

(65,000

)

 

 

 

992

 

 

 

 

192,291

 

 

Other income and expenses

 

 

 

 

(13,101

)

 

 

 

358

 

 

 

 

-

 

 

 

 

8,798

 

 

 

-

 

 

 

 

-

 

 

 

 

(3,945

)

 

Income before provision for income taxes

 

 

 

 

210,801

 

 

 

 

3,477

 

 

 

 

29,278

 

 

 

 

8,798

 

 

 

(65,000

)

 

 

 

992

 

 

 

 

188,346

 

 

Provision for income taxes

 

 

 

 

22,660

 

 

 

 

(19,511

)

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

 

3,149

 

 

Net income

 

 

 

$

188,141

 

 

 

$

22,988

 

 

 

$

29,278

 

 

 

$

8,798

 

 

$

(65,000

)

 

 

$

992

 

 

 

$

185,197

 

 

Net income attributable to noncontrolling interest (Alios)

 

 

 

 

29,512

 

 

 

 

(29,512

)

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

Net income attributable to Vertex

 

 

 

$

158,629

 

 

 

$

52,500

 

 

 

$

29,278

 

 

 

$

8,798

 

 

$

(65,000

)

 

 

$

992

 

 

 

$

185,197

 

 

Net income per share attributable to Vertex common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

$

0.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.89

 

 

Diluted

 

 

 

$

0.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.86

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

206,758

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

206,758

 

 

Diluted

 

 

 

 

217,602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

217,602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Three Months Ended December 31, 2010
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 


 

 

 

 

Adjustments

 

 

 

 

 

  

 

 

 

 

 

GAAP

 

 


Alios
Transaction
 

 

 

Stock-based
Compensation
Expense
 

 

 

September 2009
Financial
Transactions
 

 

 

Mitsubishi Tanabe
Milestone
 

 

 

Restructuring
Expense
 

 


Non-GAAP

 

 Revenues

 

 

 

$

65,524

 

 

 

$

-

 

 

 

$

-

 

 

 

$

-

 

 

$

-

 

 

 

$

-

 

 

 

$

65,524

 

 

Operating costs and expenses

 

 

 

 

232,158

 

 

 

 

-

 

 

 

 

(23,574

)

 

 

 

-

 

 

 

-

 

 

 

 

2,257

 

 

 

 

210,841

 

 

Loss from operations

 

 

 

 

(166,634

)

 

 

 

-

 

 

 

 

23,574

 

 

 

 

-

 

 

 

-

 

 

 

 

(2,257

)

 

 

 

(145,317

)

 

Other income and expenses

 

 

 

 

(13,758

)

 

 

 

-

 

 

 

 

-

 

 

 

 

10,551

 

 

 

-

 

 

 

 

-

 

 

 

 

(3,207

)

 

Net loss attributable to Vertex

 

 

 

$

(180,392

)

 

 

$

-

 

 

 

$

23,574

 

 

 

$

10,551

 

 

$

-

 

 

 

$

(2,257

)

 

 

$

(148,524

)

 

Net loss per share attributable to Vertex common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

$

(0.90

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(0.74

)

 

Diluted

 

 

 

$

(0.90

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(0.74

)

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

201,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

201,355

 

 

Diluted

 

 

 

 

201,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

201,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Reconciliation of GAAP to Non-GAAP Financial Information-Twelve Months
(in thousands, except per share amounts)
(unaudited)

 

Twelve Months Ended December 31, 2011

  

 

Adjustments

 

 

 

 

  

 

 

 

 

GAAP

  

 


Alios
Transaction
 
 

 


Stock-based
Compensation
Expense
 
 

 


September 2009
Financial
Transactions
 
 

 


Mitsubishi Tanabe
Milestone
 
 

 


Intangible Asset
Impairment
Charge, Net of
Tax
 
 

 


Restructuring
Expense
 
 

 

Non-GAAP

 

 Revenues

 

 

$

1,410,626

 

 

 

$

-

 

 

 

$

-

 

 

 

$

(250,000

)

 

 

$

(65,000

)

 

 

$

-

 

 

 

$

-

 

 

 

$

1,095,626

 

 

Operating costs and expenses

 

 

 

1,296,806

 

 

 

 

(9,178

)

 

 

 

(117,922

)

 

 

 

-

 

 

 

 

-

 

 

 

 

(105,800

)

 

 

 

(2,074

)

 

 

 

1,061,832

 

 

Income from operations

 

 

 

113,820

 

 

 

 

9,178

 

 

 

 

117,922

 

 

 

 

(250,000

)

 

 

 

(65,000

)

 

 

 

105,800

 

 

 

 

2,074

 

 

 

 

33,794

 

 

Other income and expenses

 

 

 

(53,375

)

 

 

 

358

 

 

 

 

-

 

 

 

 

38,488

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(14,529

)

 

Income before provision for income taxes

 

 

 

60,445

 

 

 

 

9,536

 

 

 

 

117,922

 

 

 

 

(211,512

)

 

 

 

(65,000

)

 

 

 

105,800

 

 

 

 

2,074

 

 

 

 

19,265

 

 

Provision for income taxes

 

 

 

19,266

 

 

 

 

(48,809

)

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

32,692

 

 

 

 

-

 

 

 

 

3,149

 

 

Net income

 

 

$

41,179

 

 

 

$

58,345

 

 

 

$

117,922

 

 

 

$

(211,512

)

 

 

$

(65,000

)

 

 

$

73,108

 

 

 

$

2,074

 

 

 

$

16,116

 

 

Net income attributable to noncontrolling interest (Alios)

 

 

 

11,605

 

 

 

 

(11,605

)

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

Net income attributable to Vertex

 

 

$

29,574

 

 

 

$

69,950

 

 

 

$

117,922

 

 

 

$

(211,512

)

 

 

$

(65,000

)

 

 

$

73,108

 

 

 

$

2,074

 

 

 

$

16,116

 

 

Net income per share attributable to Vertex common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.08

 

 

Diluted

 

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.08

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

204,891

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

204,891

 

 

Diluted

 

 

 

208,807

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

208,807

 

 

Twelve Months Ended December 31, 2010

 

 


Adjustments
 

 

 

 


 

 

 

 

 

GAAP

 

 


Alios
Transaction
 

 

 

Stock-based
Compensation
Expense
 

 

 

September 2009
Financial
Transactions
 

 

 

Mitsubishi Tanabe
Milestone
 

 

 

Intangible Asset
Impairment
Charge, Net of
Tax
 

 

 

Restructuring
Expense
 

 


Non-GAAP

 

 Revenues

 

 

 $

143,370

 

 

 

$

-

 

 

 

$

-

 

 

 

$

-

 

 

 

$

-

 

 

 

$

-

 

 

 

$

-

 

 

 

$

143,370

 

 

Operating costs and expenses

 

 

 

839,447

 

 

 

 

-

 

 

 

 

(91,124

)

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(1,501

)

 

 

 

746,822

 

 

Loss from operations

 

 

 

(696,077

)

 

 

 

-

 

 

 

 

91,124

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

1,501

 

 

 

 

(603,452

)

 

Other income and expenses

 

 

 

(58,549

)

 

 

 

-

 

 

 

 

-

 

 

 

 

56,297

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(2,252

)

 

Net loss attributable to Vertex

 

 

$

(754,626

)

 

 

$

-

 

 

 

$

91,124

 

 

 

$

56,297

 

 

 

$

-

 

 

 

$

-

 

 

 

$

1,501

 

 

 

$

(605,704

)

 

Net loss per share attributable to Vertex common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$

(3.77

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(3.02

)

 

Diluted

 

 

$

(3.77

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(3.02

)

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

200,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200,402

 

 

Diluted

 

 

 

200,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Condensed Consolidated Balance Sheets Data

 

(in thousands)

 

(unaudited)

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 


December 31,
2011

 

 

 


December 31,
2010

 


 

Assets
 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and marketable securities

 

 

 

$

968,922

 

 

 

$

1,031,411

 

Restricted cash and cash equivalents (Alios) (Note 1)

 

 

 

 

51,878

 

 

 

 

---

 

Accounts receivable, net

 

 

 

 

183,135

 

 

 

 

12,529

 

Inventories

 

 

 

 

112,430

 

 

 

 

---

 

Other current assets

 

 

 

 

14,889

 

 

 

 

13,099

 

Property and equipment, net

 

 

 

 

133,176

 

 

 

 

72,333

 

Restricted cash

 

 

 

 

34,090

 

 

 

 

34,090

 

Intangible assets (Note 3)

 

 

 

 

663,500

 

 

 

 

518,700

 

Goodwill (Note 3)

 

 

 

 

30,992

 

 

 

 

26,102

 

Other non-current assets

 

 

 

 

11,268

 

 

 

 

17,182

 

Total assets

 

 

 

$

2,204,280

 

 

 

$

1,725,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 Other liabilities

 

 

 

$

405,616

 

 

 

$

182,142

 

Accrued restructuring expense

 

 

 

 

26,313

 

 

 

 

29,595

 

Deferred tax liability (Note 3)

 

 

 

 

243,707

 

 

 

 

160,278

 

Deferred revenues

 

 

 

 

163,132

 

 

 

 

234,668

 

Convertible notes (due 2015)

 

 

 

 

400,000

 

 

 

 

400,000

 

Liabilities related to milestone
transactions (Note 2)

 

 

 

 

---

 

 

 

 

214,790

 

Noncontrolling interest (Alios) (Note 1)

 

 

 

 

178,669

 

 

 

 

---

 

Shareholders' equity (Vertex)

 

 

 

 

786,843

 

 

 

 

503,973

 

Total liabilities and shareholders' equity

 

 

 

$

2,204,280

 

 

 

$

1,725,446

 

Common shares outstanding

 

 

 

 

209,304

 

 

 

 

203,523


Note 1: The company has consolidated the financial statements of its collaborator Alios BioPharma, Inc., as of December 31, 2011 and for the period from June 13, 2011 through December 31, 2011. The Company's interest and obligations with respect to Alios' assets and liabilities are limited to those accorded to the company in its collaboration agreement with Alios. Restricted cash and cash equivalents (Alios) reflects Alios' cash and cash equivalents, which Vertex does not have any interest in and which will not be used to fund the collaboration. Increases (decreases) in the fair value of contingent milestone and royalty payments result in gains (losses) attributable to the noncontrolling interest (Alios), which decrease (increase) net income attributable to Vertex on the Consolidated Statements of Operations Data.

Note 2: A portion of the collaborative revenues, the change in fair value of derivative instruments and a portion of the net interest expense reflected in the Consolidated Statements of Operations Data, and the liabilities related to milestone transactions reflected in the Condensed Consolidated Balance Sheets Data as of December 31, 2010, relate to two financial transactions that the company entered into in September 2009 relating to milestone payments under the company's collaboration agreement with Janssen Pharmaceutica, N.V. In 2011, the company earned $250.0 million in milestone payments from its collaborator, Janssen, which are reflected in total collaborative revenues in the Consolidated Statements of Operations Data. During 2011, $155.0 million of these milestone payments was used to redeem $155.0 million in outstanding debt and the remaining $95.0 million was paid directly to the purchaser of the rights to the $95.0 million in payments.

Note 3: 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 ViroChem Pharma Inc. in 2009 and the company's collaboration agreement with Alios in 2011. The company recorded $250.6 million of in-process research and development as an intangible asset and $4.9 million of goodwill related to the Alios collaboration.

In the third quarter of 2011 the company determined that the value of VX-759, which was a back-up to VX-222, had become impaired and that the fair value of VX-759 was zero as of September 30, 2011, resulting in a $105.8 million impairment charge. In connection with this impairment charge, the company recorded a credit of $32.7 million in its provision for income taxes.

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, epilepsy and other life-threatening diseases.

Founded more than 20 years ago in Cambridge, MA, we now have ongoing worldwide research programs and sites in the U.S., U.K. and Canada. Today, Vertex has more than 2,000 employees around the world, and Science magazine named Vertex number one on its 2011 list of Top Employers in the life sciences.

Vertex's press releases are available at www.vrtx.com.

Indication and Important Safety Information for KALYDECO

 KALYDECO is a prescription medicine used for the treatment of cystic fibrosis (CF) in patients ages 6 years and older who have a certain mutation in their CF gene called the G551D mutation.

KALYDECO is not for use in people with CF due to other mutations in the CF gene. It is not effective in CF patients with two copies of the F508del mutation (F508del/F508del) in the CF gene.

It is not known if KALYDECO is safe and effective in children under 6 years of age.

KALYDECO should not be used with certain medicines, including the antibiotics rifampin and rifabutin; seizure medications (phenobarbital, carbamazepine, or phenytoin); and the herbal supplement St. John's Wort.

KALYDECO can cause serious side effects. High liver enzymes in the blood have occurred in patients taking KALYDECO. Regular assessment is recommended.

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.

These are not all the possible side effects of KALYDECO. Patients should tell their healthcare providers about any side effect that bothers them or doesn't go away.

Please see full Prescribing Information for KALYDECO at www.KALYDECO.com.

Indication and Important Safety Information for INCIVEK

 INCIVEKTM (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.

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 Dr. Leiden's statements in the second paragraph of the press release, Mr. Smith's statements in the paragraph following the caption "2012 Financial Guidance," the information provided in the four paragraphs following the statement "This section contains forward-looking guidance about the financial outlook for Vertex Pharmaceuticals" and statements regarding (i) Vertex being positioned for growth, earnings and cashflow; (ii) the expected timing of data from (A) studies of VX-809 and VX-661, in each case dosed in combination with KALYDECO, (B) studies of ALS-2200 and ALS-2158 and (C) the ZENITH study; and (iii) the plans to conduct additional studies of KALYDECO, Phase 2 studies of ALS-2200 or ALS-2158 with VX-222 or INCIVEK, a global Phase 2b study of VX-509 and a Phase 2a study of VX-787. While Vertex believes the forward-looking statements contained in this press release are accurate, 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 outcomes for each of Vertex's ongoing and planned clinical trials and studies may not be favorable, that the company's expectations regarding its 2012 INCIVEK revenues and/or operating expenses may be incorrect (including because one or more of the company's assumptions underlying its revenue or expense expectations may not be realized) 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 Information

 Vertex will host a conference call and webcast today, February 2, 2012 at 5:00 p.m. ET to review financial results and recent developments. The conference call will be webcast live and a link to the webcast may be accessed from the ‘Events & Presentations' page of Vertex's website at www.vrtx.com.

To listen to the live call on the telephone, dial 1-877-250-8889 (United States and Canada) or 1-720-545-0001 (International). To ensure a timely connection, it is recommended that users register at least 15 minutes prior to the scheduled webcast.

The conference ID number for the live call and replay is 40883608.

The call will be available for replay via telephone commencing February 2, 2012 at 8:00 p.m. ET running through 5:00 p.m. ET on February 9, 2012. The replay phone number for the United States and Canada is 1-855-859-2056. The international replay number is 1-404-537-3406.

Following the live webcast, an archived version will be available on Vertex's website until 5:00 p.m. ET on February 16, 2012. Vertex is also providing a podcast MP3 file available for download on the Vertex website at www.vrtx.com.

(VRTX-GEN)

 

Vertex Pharmaceuticals Incorporated
Investors
Michael Partridge, 617-444-6108
or
Lora Pike, 617-444-6755
or
Media
Zachry Barber, 617-444-6470

Source: Vertex Pharmaceuticals Incorporated

 

News Provided by Acquire Media

Suggested Articles

A suspected cancer-causing impurity that has been found in some blood pressure medicines has now shown up in Zantac and some OTC antacids.

Roche is steamrolling with Ocrevus, and to maintain that lead, its touting long-term data that show the earlier it’s given, the better patients do.

New data shows a significant reduction in relapse rates in patients taking Novartis' repurposed cancer drug ofatumumab.