10-QPeriod: Q1 FY2009

VERTEX PHARMACEUTICALS INC / MA Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 11, 2009For Securities:VRTX

Summary

Vertex Pharmaceuticals Inc. reported a net loss of $162.7 million for the first quarter of 2009, a significant increase from the $96.2 million net loss in the same period of 2008. This widening loss was driven by a 42% decline in total revenues to $24.0 million and a 32% increase in total costs and expenses to $185.9 million. The increased expenses are attributed to higher research and development spending, particularly for the telaprevir program, increased stock-based compensation, restructuring costs, and acquisition-related expenses from the recent acquisition of ViroChem Pharma Inc. Despite the increased loss, the company bolstered its cash position to $602.2 million due to a successful equity offering in February 2009, which brought in $313.3 million in net proceeds. The company's primary focus remains on the development of telaprevir for Hepatitis C, with its Phase 3 trials progressing as planned and an anticipated NDA filing in the second half of 2010. Vertex is also advancing its cystic fibrosis drug candidate, VX-770, and has strategically acquired ViroChem to enhance its HCV pipeline. Management believes its current cash and cash equivalents are sufficient to fund operations for at least the next twelve months, but acknowledges the need for additional capital to fund future development and commercialization efforts.

Financial Highlights

24 data points
Beta

Revenue

$23.98M

Net Income

-$162.67M

-678.4% Net Margin

EPS (Diluted)

$-1.04

Cash & Equivalents

$602.20M

Free Cash Flow

-$192.14M

Financial Statements
Beta
Revenue$23.98M
R&D Expenses$143.58M
SG&A Expenses$28.52M
Operating Expenses$185.87M
Operating Income-$161.89M
Interest Expense$3.38M
Net Income-$162.67M
EPS (Basic)$-1.04
EPS (Diluted)$-1.04
Shares Outstanding (Basic)155.86M
Shares Outstanding (Diluted)155.86M

Key Highlights

  • 1Net loss widened to $162.7 million in Q1 2009 from $96.2 million in Q1 2008.
  • 2Total revenues decreased by 42% to $24.0 million in Q1 2009.
  • 3Total costs and expenses increased by 32% to $185.9 million in Q1 2009.
  • 4Research and Development expenses increased by 23% to $143.6 million, driven by the telaprevir program.
  • 5Acquired ViroChem Pharma Inc. in March 2009 for $100 million cash and company stock, adding HCV polymerase inhibitors to the pipeline.
  • 6Cash, cash equivalents, and marketable securities increased to $869.2 million as of March 31, 2009, largely due to a February 2009 equity offering that raised $313.3 million net proceeds.
  • 7Anticipates filing an NDA for telaprevir in the second half of 2010, assuming successful completion of its registration program.

Frequently Asked Questions

Vertex's primary focus is on developing small molecule drugs for serious diseases. Their lead candidate, telaprevir, is an oral hepatitis C protease inhibitor undergoing Phase 3 trials with an anticipated NDA filing in the second half of 2010. They are also advancing VX-770 for cystic fibrosis and have acquired ViroChem to strengthen their HCV pipeline.

Vertex acquired ViroChem in March 2009 for $100 million in cash and stock valued at $290.6 million. This acquisition resulted in $7.8 million in acquisition-related expenses for the first quarter of 2009, including $2.1 million for ViroChem's restructuring. The acquisition added $525.9 million in intangible assets (in-process R&D) and $26.9 million in goodwill to Vertex's balance sheet.

As of March 31, 2009, Vertex had $869.2 million in cash, cash equivalents, and marketable securities, an increase driven by a successful $313.3 million net proceeds equity offering in February 2009. Despite ongoing operating losses, management believes its current liquidity is sufficient for at least the next twelve months. However, Vertex expects to require additional capital for the continued development and potential commercialization of telaprevir and other drug candidates.

The net loss increased substantially to $162.7 million in Q1 2009 from $96.2 million in Q1 2008 primarily due to a 42% decrease in total revenues to $24.0 million and a 32% increase in total costs and expenses to $185.9 million. The increased expenses were driven by higher R&D spending for telaprevir, increased stock-based compensation, restructuring costs, and acquisition-related expenses from the ViroChem acquisition.