10-QPeriod: Q1 FY2019

VERTEX PHARMACEUTICALS INC / MA Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 1, 2019For Securities:VRTX

Summary

Vertex Pharmaceuticals Inc. reported strong financial results for the first quarter ended March 31, 2019. Total revenues surged by 34% year-over-year to $858.4 million, primarily driven by a significant 34% increase in net product revenues to $857.3 million. This growth was largely attributable to the strong performance of SYMDEKO/SYMKEVI, which saw a remarkable 839% increase in revenue. Net income attributable to Vertex also grew substantially by 28% to $268.6 million, translating to a diluted earnings per share of $1.03. The company's robust revenue growth outpaced the increase in operating costs and expenses, which rose by 14%. Vertex continues to invest heavily in research and development, with expenses increasing by 9% to $339.5 million, reflecting its commitment to expanding its pipeline. The company's balance sheet remains strong, with cash, cash equivalents, and marketable securities totaling $3.5 billion, providing ample liquidity for future operations and strategic initiatives.

Financial Highlights

49 data points
Beta

Revenue

$858.43M

88.9% Gross Margin

Net Income

$268.63M

31.3% Net Margin

EPS (Diluted)

$1.03

Total Assets

$6.54B

Cash & Equivalents

$2.89B

Free Cash Flow

$306.74M

Financial Statements
Beta
Revenue$858.43M
Cost of Revenue$95.09M
Gross Profit$763.34M
R&D Expenses$339.49M
SG&A Expenses$147.04M
Operating Expenses$581.63M
Operating Income$276.81M
Interest Expense$14.87M
Net Income$268.63M
EPS (Basic)$1.05
EPS (Diluted)$1.03
Shares Outstanding (Basic)255.69M
Shares Outstanding (Diluted)260.18M

Key Highlights

  • 1Total revenues increased by 34% to $858.4 million for the first quarter of 2019, up from $640.8 million in the prior year period.
  • 2Net product revenues grew significantly by 34% to $857.3 million, driven by strong performance across key products, particularly SYMDEKO/SYMKEVI.
  • 3SYMDEKO/SYMKEVI revenue saw a substantial increase of 839% to $320.3 million, reflecting its successful market adoption following recent approvals.
  • 4Net income attributable to Vertex increased by 28% to $268.6 million, resulting in diluted earnings per share of $1.03, up from $0.81 in the prior year.
  • 5Research and Development expenses increased by 9% to $339.5 million, underscoring Vertex's continued investment in its pipeline and innovation.
  • 6The company maintains a strong liquidity position with $3.5 billion in cash, cash equivalents, and marketable securities as of March 31, 2019.
  • 7Vertex is advancing its triple combination regimens for Cystic Fibrosis and anticipates submitting NDAs and MAAs in Q3 and Q4 2019, respectively.

Frequently Asked Questions

The primary driver of Vertex's revenue growth in the first quarter of 2019 was the significant increase in net product revenues, up 34% year-over-year. This growth was primarily fueled by the strong performance of SYMDEKO/SYMKEVI, which experienced an 839% revenue increase, and continued sales from ORKAMBI and KALYDECO.

Vertex increased its R&D expenses by 9% to $339.5 million in Q1 2019, reflecting continued investment in its pipeline. The company expends all R&D costs as incurred and notes that accurate estimates of ultimate costs to bring drug candidates to market are difficult due to the inherent uncertainties in the drug development process. Significant investments are being made in CF programs and advancing its triple combination regimens.

Vertex reported a strong liquidity position with $3.5 billion in cash, cash equivalents, and marketable securities as of March 31, 2019. The company intends to rely on its existing cash reserves and cash flows from product sales to fund its operations. They also have a $500 million revolving credit facility available.

Vertex reported positive Phase 3 clinical trial data for its triple combination regimens (VX-659/tezacaftor/ivacaftor and VX-445/tezacaftor/ivacaftor). The company expects to submit a New Drug Application (NDA) to the FDA in the third quarter of 2019 and a Marketing Authorization Application (MAA) in Europe in the fourth quarter of 2019 for a triple combination regimen, which could significantly expand the number of CF patients eligible for treatment.