10-QPeriod: Q1 FY2010

VERTEX PHARMACEUTICALS INC / MA Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 3, 2010For Securities:VRTX

Summary

Vertex Pharmaceuticals Inc. reported its financial results for the quarter ended March 31, 2010, showing a net loss of $165.3 million, or $0.83 per share, compared to a net loss of $162.7 million, or $1.04 per share, in the same period of the prior year. The widened net loss was primarily driven by a decrease in total revenues, down 6% to $22.4 million, largely due to a significant drop in collaborative revenues from Janssen, partially offset by increased royalty revenues and a substantial boost in collaborative revenues from Mitsubishi Tanabe. Significant ongoing investments in research and development, totaling $143.0 million for the quarter, continue to be a major expenditure. The company is advancing its lead drug candidate, telaprevir, with expected NDA submission in the second half of 2010. Other key pipeline programs include VX-770 for cystic fibrosis. While cash reserves remain substantial at $1.1 billion, the company anticipates continued losses and the potential need for future capital raises, dependent on the success and timelines of its drug development programs, particularly telaprevir.

Financial Highlights

41 data points
Beta

Revenue

$22.43M

Net Income

-$165.27M

-736.9% Net Margin

EPS (Diluted)

$-0.83

Total Assets

$1.77B

Cash & Equivalents

$396.55M

Free Cash Flow

-$199.57M

Financial Statements
Beta
Revenue$22.43M
R&D Expenses$143.01M
SG&A Expenses$35.55M
Operating Expenses$182.71M
Operating Income-$160.28M
Interest Expense$3.96M
Net Income-$165.27M
EPS (Basic)$-0.83
EPS (Diluted)$-0.83
Shares Outstanding (Basic)198.94M
Shares Outstanding (Diluted)198.94M

Key Highlights

  • 1Reported a net loss of $165.3 million ($0.83/share) for Q1 2010, a slight increase from $162.7 million ($1.04/share) in Q1 2009.
  • 2Total revenues decreased by 6% to $22.4 million, primarily due to a 62% decline in collaborative revenues from Janssen, partially offset by higher royalty revenues and increased Mitsubishi Tanabe collaboration revenue.
  • 3Research and development expenses remained high at $143.0 million, consistent with the prior year's quarter, reflecting continued investment in pipeline development.
  • 4The company expects to submit its New Drug Application (NDA) for telaprevir in the second half of 2010, with potential product sales commencing in 2011 if approved.
  • 5Cash, cash equivalents, and marketable securities stood at $1.1 billion as of March 31, 2010, providing a runway for at least the next twelve months.
  • 6Sales, General, and Administrative (SG&A) expenses increased by 25% to $35.6 million, indicating preparations for potential commercialization activities.

Frequently Asked Questions

Vertex reported a net loss of $165.3 million, or $0.83 per share, for the first quarter of 2010, compared to a net loss of $162.7 million, or $1.04 per share, in the first quarter of 2009. While the net loss slightly widened, the loss per share decreased due to a significant increase in the weighted-average number of common shares outstanding.

Vertex is advancing telaprevir, its lead drug candidate for Hepatitis C (HCV), through its registration program. The company expects to receive final data from its Phase 3 trials in Q2 and Q3 2010 and plans to submit its New Drug Application (NDA) in the second half of 2010, with potential commercial launch in 2011. They also initiated a clinical trial combining telaprevir with VX-222.

As of March 31, 2010, Vertex held $1.1 billion in cash, cash equivalents, and marketable securities. Management believes this is sufficient to fund operations for at least the next twelve months, though they anticipate continued losses and may need to raise additional capital depending on development timelines and commercialization efforts.

Revenues are primarily derived from collaborative arrangements and royalties. Collaborative revenues saw a significant decrease due to lower net reimbursements from Janssen for telaprevir development, though this was partially offset by increased revenues from Mitsubishi Tanabe. Royalty revenues increased slightly. Key expenses include substantial investments in Research and Development ($143.0 million), which continue to be a significant cost. Sales, General, and Administrative expenses increased, reflecting preparation for potential commercialization.