Vertex Pharmaceuticals Inc.
) posted a loss of 12 cents per share (including stock-based
compensation expense) in the first quarter of 2013, well below
the year-ago earnings of 41 cents per share. First quarter 2013
loss was, however, narrower than the Zacks Consensus Estimate of
a loss of 17 cents.
Excluding the impact of stock-based compensation expense,
first quarter 2013 earnings were 3 cents, well below the year-ago
earnings of 55 cents.
Revenues for the reported quarter fell 25.2% to $328.4
million. Revenues were above the Zacks Consensus Estimate of $301
The Quarter in Detail
Vertex Pharma's first quarter revenues consisted of revenues
earned from the sale of Incivek ($205.6 million), Kalydeco ($61.8
million), royalty revenue ($43.6 million) and collaborative
revenues ($17.4 million).
While Incivek revenues declined 42.4% from the year-ago
quarter, revenues declined 7.5% on a sequential basis. Revenues
continue to be affected by a fewer number of new patients seeking
treatment and the warehousing effect. Patients are basically
deferring treatment and waiting for new and more effective drugs
to become available.
Royalty revenues for the quarter consisted of revenues
received from partner
Johnson & Johnson
) on Incivo sales in international markets. Incivo's performance
was strong in Latin America.
Vertex Pharma has exclusive US commercialization rights to
Incivek and has agreements with Johnson & Johnson and
Mitsubishi Tanabe Pharma for the commercialization of the drug
outside the US. While Johnson & Johnson is responsible for
the commercialization of Incivek outside North America and the
Far East, Mitsubishi Pharma markets it in certain areas of the
Far East including Japan (brand name: Telavic).
Kalydeco continued to perform well with Vertex Pharma
reporting rapid uptake in a major part of eligible patients in
the US. While US sales were $50 million, ex-US sales were about
$12 million in the first quarter of 2013. Ex-US sales should
continue to improve with Vertex Pharma achieving reimbursement
approval in major European countries.
Research and development (R&D) expenses for the quarter
increased 11.1% to $194.8 million, mainly due to continued
investment in development activities.
First quarter 2013 selling, general and administrative
(SG&A) expenses declined 19.9% to $79.8 million.
Kalydeco Outlook Raised
Vertex Pharma raised its outlook for Kalydeco revenues by $20
million to $300 million - $340 million. However, the full year
revenue forecast remained unchanged at $1.10 - $1.25 billion.
Operating expenses (excluding stock-based compensation expense
and Alios expenses) continue to be expected in the range of $1.09
billion to $1.15 billion. This includes R&D expenses of $750
million to $790 million and SG&A spend of $340 million to
This implies higher R&D expenses and lower SG&A
expenses in 2013 compared to 2012.
Vertex Pharma's first quarter results were
better-than-expected. However, we expect Incivek revenues to
continue being affected by warehousing and a slowdown in new
patient additions. Meanwhile, Kalydeco revenues should pick up
with additional launches taking place in the EU.
With Vertex Pharma working on expanding Kalydeco's label and
strengthening its hepatitis C virus (HCV) portfolio, we expect
investor focus to remain on pipeline progress. The successful
development of the Kalydeco and VX-809 combination would expand
the market for Kalydeco significantly.
Vertex Pharma currently carries a Zacks Rank #3 (Hold).
Companies that currently look well-positioned include
Cleveland BioLabs, Inc.
). Both are Zacks Rank #1 (Strong Buy) stocks.
CLEVELAND BIOLB (CBLI): Free Stock Analysis
JOHNSON & JOHNS (JNJ): Free Stock Analysis
OSIRIS THERAPTC (OSIR): Free Stock Analysis
VERTEX PHARM (VRTX): Free Stock Analysis
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