10-KPeriod: FY2010

VERTEX PHARMACEUTICALS INC / MA Annual Report, Year Ended Dec 31, 2010

Filed February 17, 2011For Securities:VRTX

Summary

Vertex Pharmaceuticals Inc. (VRTX) reported its annual results for the fiscal year ended December 31, 2010. The company is heavily focused on the development and commercialization of small molecule drugs, with its lead candidate, telaprevir, for Hepatitis C Virus (HCV) infection being a major point of investor interest. Vertex submitted a New Drug Application (NDA) for telaprevir in November 2010 and received priority review from the FDA, with a target completion date of May 23, 2011. The company anticipates obtaining approval and launching telaprevir in the U.S. in 2011. Beyond telaprevir, Vertex is advancing other clinical development programs, notably VX-770 for cystic fibrosis (CF), with a registration program in Phase 3. The company is strategically building its commercial capabilities in the U.S. and Canada to support potential launches. While significant investments in research and development continue, Vertex incurred substantial net losses, a pattern expected to persist until telaprevir generates substantial product revenue. Key financial highlights include total revenues of $143.4 million and a net loss of $754.6 million for 2010.

Financial Highlights

50 data points
Beta

Revenue

$143.37M

100.0% Gross Margin

Net Income

-$754.63M

-526.3% Net Margin

EPS (Diluted)

$-3.77

Total Assets

$1.73B

Cash & Equivalents

$243.20M

Free Cash Flow

-$673.50M

Financial Statements
Beta
Revenue$143.37M
Cost of Revenue$0
Gross Profit$143.37M
R&D Expenses$637.42M
SG&A Expenses$187.80M
Operating Expenses$839.45M
Operating Income-$696.08M
Interest Expense$19.27M
Net Income-$754.63M
EPS (Basic)$-3.77
EPS (Diluted)$-3.77
Shares Outstanding (Basic)200.40M
Shares Outstanding (Diluted)200.40M

Key Highlights

  • 1Vertex submitted an NDA for telaprevir, its lead HCV drug candidate, and received FDA priority review, with a decision expected in May 2011.
  • 2The company anticipates launching telaprevir in the U.S. in mid-2011, and is building its commercial organization to support this.
  • 3VX-770, a drug candidate for cystic fibrosis, is in Phase 3 clinical trials, with potential for an NDA submission in the second half of 2011.
  • 4Total revenues for 2010 were $143.4 million, a 41% increase from 2009, primarily driven by collaborative revenues.
  • 5The company reported a net loss of $754.6 million for 2010, an increase from $642.2 million in 2009, reflecting significant R&D investments.
  • 6Vertex has a strong cash position with $1.03 billion in cash, cash equivalents, and marketable securities as of December 31, 2010.
  • 7Collaborations with Janssen Pharmaceutica and Mitsubishi Tanabe Pharma are crucial for telaprevir's development and commercialization.

Frequently Asked Questions

Vertex's primary focus for 2011 is obtaining FDA approval for telaprevir, its lead drug candidate for Hepatitis C, and preparing for its commercial launch in the United States. The company is also advancing its cystic fibrosis drug candidate, VX-770, through Phase 3 trials.

As of December 31, 2010, Vertex Pharmaceuticals reported total revenues of $143.4 million, an increase from $101.9 million in 2009. However, the company incurred a significant net loss of $754.6 million for the year, an increase from $642.2 million in 2009, reflecting substantial investments in research and development, particularly for telaprevir.

The primary risks for Vertex include the potential failure to obtain FDA approval for telaprevir or delays in that process, the success of telaprevir's commercialization if approved (facing competition from Merck's boceprevir), reliance on third-party manufacturers, the inherent uncertainties in drug development, and the need for significant ongoing investment in R&D, which results in continued net losses.

Vertex has several other promising drug candidates. VX-770 for cystic fibrosis is in Phase 3 development, with a potential NDA submission in the latter half of 2011. The company also has earlier-stage clinical programs for other indications, including VX-222 for HCV, VX-509 for inflammatory diseases, and VX-765 for epilepsy.