Vertex Earnings: Incivek's Boffo Launch
By Adam Feuerstein 07/28/11 - 07:35 PM EDT|
Updated with new information from a conference call, stock price.
CAMBRIDGE, Mass. (TheStreet) -- Vertex Pharmaceuticals reported second quarter Incivek sales of $75 million, the first measure of the hepatitis C drug's commercial launch since receiving U.S. approval in late May.
The Incivek tally for the quarter, which includes wholesaler inventory, still far exceeded Wall Street's expectations of $31 million and even trounced the $40 million-plus "whisper number" bandied about in some investor circles that also included wholesale inventory.
Vertex shares closed Thursday $47.98, ahead of the release of second quarter results. The stock was trading at $49.80 in the after-market session.
On a conference call, Vertex executives said about half of the $75 million in Incivek sales remained in the distribution channel at quarter's end, but that a vast majority of that had already been sold through to patients and that sales in July were "strong."
More than 50% of the patients starting Incivek therapy are newly diagnosed with hepatitis C, while the rest are patients who sought treatment before Incivek was approved but were not cured, Vertex said on its call.
New revenue generated from Incivek helped Vertex narrow its second quarter loss even though expenses in the quarter were higher. The company posted a net loss of $174.1 million, or 85 cents a share from a net loss of $200 million, or $1 a share, one year ago.
On an adjusted basis, Vertex lost 67 cents a share in the quarter. Total revenue was $114 million, up from $31.6 million in the year-ago quarter.
Total operating expenses rose 39% in the quarter to $280 million from $201 million a year ago, including a big jump in sales and marketing expenses to $97.5 million from $41 million. The higher costs were largely related to the Incivek commercial launch.
U.S. regulators approved Vertex's Incivek and Merck's competing hepatitis C drug Victrelis in May just 10 days apart, and ever since, the two drugs have been battling for market share. Investors are closely following prescription data for both Incivek and Victrelis, which to date has shown a strong substantial advantage in Vertex's favor.
Vertex is counting on blockbuster sales of Incivek to help the company become profitable for the first time.
Vertex did not provide sales guidance for Incivek in its earnings announcement but said the company expects to be "significantly earnings positive" in 2012. The current consensus forecast calls for Vertex to earn $4.05 a share in 2012.
Analysts and investors had high expectations for the early launch of the drug, which dramatically improves the cure rate in hepatitis C. Thursday's results and the company's bullish commentary about ramping sales in the current quarter suggest that Incivek forecasts will rise once analysts rejigger their financial models.
Before Thursday's results, investors were forecasting third-quarter Incivek sales of $162 million followed by $254 million in the fourth quarter, according to a survey conducted earlier this week by ISI Group biotech analyst Mark Schoenebaum.
SellinG Incivek does cost money and Vertex said that it now expects 2011 total operating expenses, adjusted, in the range of $960 million to $980 million. That's up from previous operating expense guidance in the range of $890 million to $930 million. The company also said it expects Incivek to receive formal approval in Europe later this quarter. European regulators just recently recommended Incivek's approval.
Merck is set to announce second-quarter earnings Friday morning, which should include disclosure of Victrelis sales.
While Incivek sales are very much the focal point of Vertex's second quarter results, the company also said that will be submitted its cystic fibrosis drug VX-770 for approval in the U.S. and Europe in October.
Results from a phase II study of Vertex's experimental rheumatoid arthritis drug VX-509 will be ready in September, the company said.
The old gold-standard treatment regimen for hepatitis C -- 48 weekly injections of interferon and daily doses of oral ribavirin -- cured about 40% of patients. Adding Incivek to that regimen shortens treatment duration for some patients to six months and improves cure rates to more than 80%.
Higher cure rates are expected to expand the pool of hepatitis C patients seeking treatment, including patients who were treated unsuccessfully with older hepatitis C drugs but who are now coming back for retreatment with the new drugs.
Vertex is also working on new combination therapies against hepatitis C but faces competition from Pharmasset, Johnson & Johnson and Bristol-Myers Squibb, among others.
Vertex Smashes Wall Street Sales Expectations In Hepatitis C Drug Debut
Luke Timmerman 7/28/11
Vertex Pharmaceuticals is off to a running start in the marketplace with its brand new hepatitis C drug.
The Cambridge, MA-based company (NASDAQ: VRTX) said today that it generated $74.5 million in sales of telaprevir (Incivek) in the quarter that ended June 30. That's an especially big number as far as new pharmaceutical rollouts go-Wall Street analysts were only expecting about $31 million, according to TheStreet.com. It also should be noted that Vertex's performance came in just six weeks of work, since the drug was first cleared for sale by the FDA on May 23.
Vertex's sales number is the most important figure in today's earnings report, since this product has been hotly anticipated for years. The product has shown in clinical trials that when it is added to a couple standard treatments, it can double the cure rate to about 80 percent of patients, while cutting the course of treatment in half, to about six months. Vertex's drug, along with a competitor from Merck, has created new demand for treatment among the estimated 3 million Americans with hepatitis C infections.
Many are lining up to get treatment for the first time for this chronic liver damaging disease, since the cure rate is so much higher, and the Vertex drug enables patients to shorten the time they must endure the flu-like side effects of the standard drugs.
Shares of Vertex climbed $1.52, or about 3 percent, to $49.50 in after-hours trading following the earnings report. Vertex will host a conference call and webcast today at 5 pm ET/2 pm PT to discuss the second quarter, and take analysts' questions.
Vertex Reports Strong Initial Incivek Sales, Sees 2012 Profits
NEW YORK (Dow Jones)--Vertex Pharmaceuticals Inc. (VRTX) reported strong initial sales of its newly launched hepatitis C pill Incivek in the second quarter, and said it expects be profitable in 2012.
The Cambridge, Mass., drug maker reported $75 million in revenue from Incivek in the quarter, which included less than six weeks of sales of the drug after its late-May approval by the Food and Drug Administration.
But the company noted that about 50% of the drug sold was to distributors--rather than to patients--at the end of June. On a conference call, the company said that the "vast majority" of the drug in the distribution channel at quarter's end had already been sold.
Canaccord Genuity recently projected $30 million in Incivek sales for the quarter, citing a consensus estimate of $31 million on Wall Street.
Shares of Vertex rose 1.1% to $48.50 in after-hours trading.
For the three months ended June 30, Vertex reported a loss of $174.9 million, or 85 cents a shares, narrower than the year-ago loss of $200.4 million, or $1 a share. Analysts projected a loss of 96 cents a share, according to Thomson Reuters.
Revenue leapt to $114.4 million from $31.6 million, easily beating analysts' consensus estimate of $54.3 million.
Analysts project 2012 earnings of $4.07 a share on revenue of $2.25 billion.
Vertex has entered a competitive market with Incivek, going head-to-head with pharmaceutical giant Merck & Co.'s (MRK) Victrelis, a similar treatment approved just weeks before Incivek.
Early data suggests Vertex is easily leading the race, an outcome predicted by many analysts because of Incivek's perceived advantage in effectiveness and simplicity in dosing.
Both drugs are known as protease inhibitors, which are designed to block an enzyme that helps the hepatitis C virus replicate, and have shown improved cure rates for hepatitis C compared to the previous standard of care.
New Vertex hepatitis drug shines out of gate
Thu Jul 28, 2011 6:30pm EDT
* EPS loss of $0.85 vs Street view loss $0.96
* Incivek sales $74.5 million in first five weeks
* Shares rise 1.6 percent (Adds company comment, hepatitis background, updates shares)
By Bill Berkrot
NEW YORK, July 28 (Reuters) - Vertex Pharmaceuticals Inc's (VRTX.O) new hepatitis C drug stormed out of the gate, posting sales of nearly $75 million in its first five weeks on the market, and the company's shares rose.
Incivek, which is likely to become part of the standard of care for hepatitis C and widely expected to become a multibillion-dollar seller, won U.S. approval in May.
"This is a really, really impressive revenue ramp," Sanford Bernstein analyst Geoffrey Porges said. "You run this trend forward and you get to $200 million in revenue in the third quarter."
More than 3,000 patients had started therapy with Incivek by mid-July with a broad mix of previously untreated patients and those who failed to be cured by older drugs, Vertex told analysts and investors on a conference call.
There had been speculation that thousands of patients had been delaying treatment in anticipation of the new medicine and the early sales figures appear to bear that out.
Investors who have been shorting the Vertex stock with a view that Incivek was bound to fall shy of sky-high expectations "are going to be in a world of pain tomorrow," Porges predicted.
Vertex also said it would file an application seeking U.S. approval of its experimental cystic fibrosis drug, VX-770, in October. It had previously said it would file sometime in the second half of the year.
The company reported a narrower and smaller-than-expected second-quarter net loss as the high cost of launching its first commercial product and higher research and development expenses were offset by strong early demand for the new medicine.
The biotechnology company on Thursday posted a net loss of $174.1 million, or 85 cents per share, compared with a loss of $200 million, or $1 per share, a year ago. Analysts on average expected a loss of 96 cents per share, according to Thomson Reuters I/B/E/S.
The company said it expects to be "significantly earnings positive in 2012."
Total revenue for the quarter of $114.4 million, including $74.5 million from Incivek sales, sailed past Wall Street revenue estimates of $54.3 million, according to Thomson Reuters I/B/E/S.
A review of recent analyst expectations for early Incivek sales compiled by ISI Group analyst Mark Schoenebaum found a mean estimate of $31 million, less than half of what sales turned out to be.
Incivek is competing with a similar new drug from Merck & Co (MRK.N) called Victrelis. Incivek prescriptions have been outpacing Victrelis at a rate of better than 3-to-1 in the early going, according to data compiled by Wolters Kluwer's inThought unit.
"Physicians are opting for the drug that's easier to use and that's Incivek," Porges said.
The new drugs in combination with older standard treatments have demonstrated far higher cure rates than the older medicines alone, as well as the possibility of significantly shorter treatment durations for many patients.
About 170 million people worldwide are chronically infected with hepatitis C, including some 3.2 million Americans who have the serious liver disease that can lead to cirrhosis, liver cancer, need for transplant or death if untreated.
The disease is spread primarily through sharing of needles, such as for illegal drugs and tattoos, or from blood transfusions prior to standard blood screening for the virus.
Patients can live with the virus for many years without detecting any symptoms, leading for calls by some for increased hepatitis testing.
Vertex shares were up 1.6 percent in extended trading at $48.75 from their Nasdaq close at $47.98 after initially rising more than 4 percent following the release of the second quarter results. (Reporting by Bill Berkrot; Editing by Tim Dobbyn, Gunna Dickson and Bernard Orr)