Vertex Misses despite Y/Y Growth - Analyst Blog


Vertex Pharmaceuticals Inc. ( VRTX ) posted first quarter 2012 earnings (including stock-based compensation expense) of 42 cents per share, missing the Zacks Consensus Estimate of 56 cents. However, first quarter earnings represented a huge turn around from the year-ago loss of $1.05. Earnings were positively impacted by increased revenues.

Revenues for the reported quarter came in at $438.7 million, significantly above the year-ago figure of $73.7 million, but missed the Zacks Consensus Estimate of $448 million. Vertex Pharma recorded such unprecedented growth in revenues riding on strong sales of hepatitis C virus (HCV) treatment, Incivek (telaprevir), which was launched in the second quarter of 2011.


Vertex Pharma's first quarter revenues consisted of revenue earned from the sale of Incivek ($356.9 million), Kalydeco ($18.4 million; launched in January 2012) royalty revenue (up 543.1% to $39.0 million) and collaborative revenue (down 64.0% to $24.4 million).

Royalty revenue for the quarter included $32.9 million received from partner Johnson & Johnson ( JNJ ) as royalty from sales of Incivo in Europe.

Vertex Pharma has exclusive US commercialization rights to Incivek and has joined hands 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.

While Incivek gained European approval under the trade name Incivo during the third quarter 2011, the product is marketed in Japan as Telavic.

Vertex Pharma also receives royalties from GlaxoSmithKline ( GSK ) on sales of Lexiva, a HIV protease inhibitor.

Other Details

Research and development (R&D) expenses for the quarter increased 23.8% to $196.4 million, mainly due to continued investment in the pipeline.

First quarter selling, general and administrative (SG&A) expenses shot up 55.4% to $111.1 million, as a result of expansion activities related to the company's commercial organization and costs related to the US launch and European approval of Kalydeco.


Vertex Pharma expects Incivek revenues in the range of $1.5 - $1.7 billion in 2012. Further, the company expects operating expenses to amount $1.03 - $1.13 billion.

While R&D expenses are forecasted to be between $690 and $760 million, SG&A expenses are expected in the range of $340 - $370 million.

Our View

We currently have a Neutral recommendation on Vertex Pharma. The stock carries a Zacks #3 Rank (Hold rating) in the short-run. We are pleased with the company's performance and believe that with the worldwide availability of Incivek and Kalydeco, Vertex Pharma will continue to post strong results.

GLAXOSMITHKLINE ( GSK ): Free Stock Analysis Report
JOHNSON & JOHNS ( JNJ ): Free Stock Analysis Report

To read this article on click here.
Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: GSK , JNJ

More from

Related Videos




Most Active by Volume

  • $4.795 ▼ 5.98%
  • $15.495 ▼ 0.16%
  • $27.74 ▼ 2.15%
  • $29.1101 ▲ 1.25%
  • $5.13 ▼ 5.35%
  • $28.02 ▼ 0.25%
  • $12.745 ▼ 1.12%
  • $111.965 ▲ 0.33%
As of 10/13/2015, 02:41 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by