Markets

Vertex Pharma's (VRTX) Q4 Earnings & Sales Beat; Stock Up

Vertex Pharmaceuticals Inc.VRTX reported fourth-quarter 2016 earnings of 11 cents per share (including the impact of stock-based compensation expenses). The Zacks Consensus Estimate was of a loss of 1 cent per share. Notably, the company had posted breakeven results in the year-ago quarter.

Excluding stock-based compensation expenses, the company reported earnings of 35 cents per share as against the year-ago gain of 18 cents.

Vertex reported revenues of $458.7 million in the fourth quarter, which surpassed the Zacks Consensus Estimate of $449 million. Moreover, revenues grew 9.8% from the year-ago period.

The quarterly results impressed investors and resulted in the shares gaining 4%. In fact, shares of Vertex have outperformed the Zacks classified Medical-Biomed/Genetics industry in the past one year. The stock lost 7.6% during the period, while the industry registered a decline of 13.5%.

CF Franchise Sales Growth

Vertex's fourth-quarter revenues consisted of sales from cystic fibrosis (CF) products Kalydeco ($177.1 million), and Orkambi ($276.9 million). This apart, it generated collaborative revenues of $0.9 million and royalty revenues of $3.9 million in the quarter.

The company reported 2% decrease in Kalydeco sales to $177.1 million compared with $180.7 million in the year-ago quarter.

Orkambi (lumacaftor/ivacaftor) sales were $276.9 million, up 25.9% year over year.

Adjusted (including stock-based compensation expenses) research and development expenses increased 5.7% to $245.5 million in the fourth quarter. Adjusted (including stock-based compensation expenses) selling, general and administrative (SG&A) expenses increased 15.1% to $108.6 million.

2016 Results

Full-year 2016 sales surged 70% year over year to $1.7 billion, in line with the Zacks Consensus Estimate.

The company incurred loss (including stock based compensation) of 10 cents per share in 2016. This was significantly narrower than the Zacks Consensus Estimate of a loss of 25 cents as well as the year-ago loss of $2.06 per share.

Maintains Kalydeco and Orkambi Guidance

Vertex maintained its 2017 guidance for Kalydeco and Orkambi revenues, which was provided earlier this month. While Orkambi revenues are expected in the range of $1.1-$1.3 billion, Kalydeco revenues are estimated in the range of $690-$710 million. Management expects Orkambi revenues to be driven by the label expansion in the pediatric population (aged 6-11 years) in the U.S., and pricing and reimbursement in the European countries.

Orkambi was approved for use in children (6-11 years old) by the FDA in Sep 2016. About 11,000 children with CF in the U.S. fall under this category. This marketed drug is expected to drive sales growth in 2017.

The company expects first-quarter 2017 Orkambi net product revenues to be flat with the fourth-quarter 2016 Orkambi net product revenues.

Combined adjusted research and development (R&D) and selling, general and administrative (SG&A) expenses in 2017 are anticipated to be in the range of $1.25-$1.30 billion.

Product Pipelines

Concurrent with the press release, Vertex announced positive data from a recently completed phase II study of VX-150 in people with pain from osteoarthritis of the knee. Data from the proof-of-concept study showed statistically significant pain relief when treated with VX-150. The data supports further development of the candidate for the potential treatment of various pain conditions.

Moreover, the company plans to initiate additional phase II proof-of-concept studies for VX-150 in the second half of 2017 in neuropathic and acute pain.

Earlier this month, Vertex announced an out-license agreement with Merck KGaA for the worldwide development and commercialization of four promising R&D programs for their oncology portfolio. As part of the agreement, Merck KGaA, Darmstadt, Germany licensed two clinical-stage programs comprising the compounds VX-970, VX-803 and VX-984.

Next-Generation Correctors

The company announced the advancement of two next-generation correctors, VX-440 and VX-152 into phase II development. Further, the company is evaluating additional next-generation correctors inphase I study for the treatment of people with cystic fibrosis (CF).

Vertex Pharmaceuticals Incorporated Price, Consensus and EPS Surprise

Vertex Pharmaceuticals Incorporated Price, Consensus and EPS Surprise | Vertex Pharmaceuticals Incorporated Quote

Zacks Rank & Key Picks

Vertex currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector are Anika Therapeutics, Inc. ANIK , Exact Sciences Corporation EXAS and Enzo Biochem, Inc. ENZ . While Anika and Exact Sciences sport a Zacks Rank #1 (Strong Buy), Enzo carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Anika's earnings estimates increased from $2.09 to $2.10 for 2017 over the last 60 days. The company posted a positive surprise in all of the four trailing quarters with an average beat of 33.14%.

Enzo Biochem's loss estimates narrowed from 17 cents to 16 cents for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 22.50%.

Exact Sciences' earnings estimates narrowed from $1.72 to $1.70 for 2016 and from $1.41 to $1.38 in 2017 over the last 60 days. The company posted a positive earnings surprise in all of the four trailing quarters with an average beat of 14.12%.

Zacks' Best Private Investment Ideas

In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?

Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Vertex Pharmaceuticals Incorporated (VRTX): Free Stock Analysis Report

Enzo Biochem, Inc. (ENZ): Free Stock Analysis Report

Anika Therapeutics Inc. (ANIK): Free Stock Analysis Report

Exact Sciences Corporation (EXAS): Free Stock Analysis Report

To read this article on Zacks.com 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 Nasdaq, Inc.


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

In This Story

VRTX ANIK EXAS ENZ

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More