Vertex Q1 Loss Narrows, Says Mid-stage Study Of CF Drug Shows Positive Results

(RTTNews) - Vertex Pharmaceuticals Inc. (VRTX) on Thursday reported a loss for the first quarter that narrowed from last year as fewer one-time charges more than offset a decline in revenues. The biotechnology company also said it will end further investment into research and development efforts in treatments for hepatitis C, and accordingly, lowered its revenue outlook for fiscal 2014.

In a separate statement, Vertex said that treatment with the combination of its cystic fibrosis drug Kalydeco and an experimental drug in a Phase 2 study showed statistically significant improvements in lung function in people with two specific genetic mutations who were already taking Kalydeco.

Vertex reported a net loss for the first quarter that narrowed to $232.46 million or $1.00 per share from $308.02 million or $1.43 per share for the year-ago quarter.

The latest quarter's results include net charges of $81.1 million, comprised primarily of hepatitis C revenues and expenses, stock-based compensation expense, and transition costs related to the relocation of the company's corporate headquarters.

The prior-year quarter's results included $313.8 million in certain charges, comprised primarily of a one-time charge of $412.9 million, which was partially offset by a tax benefit of $127.6 million related to an impairment of an intangible hepatitis C asset, VX-222.

Excluding items, adjusted net loss for the latest quarter was $151.39 million or $0.65 per share, compared to adjusted net income of $5.75 million or $0.03 per share in the prior year quarter. On average, sixteen analysts polled by Thomson Reuters expected the company to report loss of $0.68 per share for the quarter. Analysts' estimates typically exclude special items.

The adjusted loss for the quarter was primarily the result of a reduction in Incivek net product revenues and in royalties from Incivo.

Total revenues for the first quarter declined 64 percent to $118.45 million from $328.37 million a year ago. Total adjusted revenues, which exclude hepatitis C revenues and royalties, for the latest quarter were $108.2 million. Analysts had a consensus revenue estimate of $134.36 million for the quarter.

Product revenues for the quarter declined 61 percent to $103.46 million, while royalty revenues decreased 75 percent to $10.73 million, and collaborative revenues fell 76 percent to $4.26 million.

Kalydeco's revenues for the quarter surged 61 percent to $99.5 million, primarily from increased revenues from the drug in eligible patients in Europe, in addition to those previously being treated in the U.S. Hepatitis C drug Incivek's revenues plunged 98 percent to $3.9 million.

Looking ahead to fiscal 2014, Vertex lowered its outlook for adjusted revenues of $520 million to $550 million, down from the prior range of $570 million to $600 million. Analysts currently expect the company to report revenues of $594.89 million for the year.

Vertex noted that the updated guidance reflects the removal of revenues and costs following its decision to end further investment in hepatitis C research and development activities. However, the company maintained its estimate for total 2014 Kalydeco net revenues of $470 to $500 million.

Vertex said it has amended the terms of its agreement with Alios BioPharma regarding the development and commercialization of the nucleotide analogue hepatitis C virus or HCV polymerase inhibitor VX-135. Based on the revised agreement and following the introduction of new oral therapies from rivals, Vertex plans to out-license VX-135 and to end further investment into research and development efforts in hepatitis C.

Jeffrey Leiden, Chairman, President and Chief Executive Officer of Vertex said, "We recognize the unique opportunity we have to develop multiple new medicines for people with CF, and with our decision to end further investment in hepatitis C, we have increased our focus on CF and are advancing key clinical studies as rapidly as possible."

Separately, Vertex said that treatment with the combination of an experimental drug VX-661 and Kalydeco in a 28-day mid-stage study showed statistically significant improvements in lung function in people with both the F508del mutation and G551D mutation who were already taking Kalydeco.

The company noted that treatment with a combination of Kalydeco and VX-661 for 28 days resulted in a mean within-group absolute improvement in lung function of 4.6 percentage points, a mean within-group relative improvement in lung function of 7.3 percent, and a mean reduction in sweat chloride of -7.02 mmol/L through the end of treatment.

Cystic fibrosis or CF is a rare, life-threatening genetic disease affecting approximately 75,000 people in North America, Europe and Australia. CF is caused by a defective or missing CFTR protein resulting from mutations in the CFTR gene.

VRTX closed Thursday's regular trading session at $68.95, up $1.25 or 1.85 percent on a volume of 1.84 million shares. In after-hours, the stock further gained $0.96 or 1.39 percent to $69.91.