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Vertex's (VRTX) Q3 Loss Wider than Expected, Sales Miss
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Vertex Pharmaceuticals Inc. (VRTX - Free Report) reported third-quarter 2016 loss of 8 cents per share (including the impact of stock-based compensation expense), wider than the Zacks Consensus Estimate of a loss of 6 cents. However, the loss was narrower than a loss of 40 cents reported in the year-ago quarter.
Excluding stock-based compensation expense, the company reported earnings of 16 cents per share, as against a year-ago loss of 13 cents.
Vertex reported revenues of $414 million in the third quarter, slightly below the Zacks Consensus Estimate of $417 million. However revenues rose 38% from the year-ago period.
CF Franchise Sales Grow Sequentially
Vertex’s third-quarter revenues consisted of sales from cystic fibrosis (CF) products Kalydeco ($175.6 million), Orkambi ($234.0 million), collaborative ($0.03 million) and royalty revenues ($3.8 million).
The company reported a 6% increase in Kalydeco sales in the third quarter from the year-ago period.
Orkambi (lumacaftor/ivacaftor), approved for the treatment of CF in people aged 12 and above with two copies of the F508del mutation, delivered sales of $234.0 million, up 79% year over year.
Adjusted (including stock-based compensation expense) research and development expenses increased 3.2% to $254 million. Third-quarter adjusted (including stock-based compensation expense) selling, general and administrative (SG&A) expenses increased 12.4% to $105.2 million.
Maintains Kalydeco and Orkambi Guidance
Vertex maintained its guidance for Kalydeco and Orkambi revenues for the full year 2016. While Kalydeco revenues are expected in the range of $685–$705 million, Orkambi revenues are expected in the range of $950 million–$990 million.
We remind investors that last month, Vertex lowered its 2016 guidance for Orkambi sales to the range of $950–$990 million from the previously expected $1.0–$1.1 billion. The revision was primarily due to slower-than-anticipated launch of Orkambi in Germany, the close to peak penetration for the approved indication in the U.S., and less-than-expected refills in the months of July and August.
Orkambi was approved for use in children (6–11 years old) by the FDA last month. About 2,400 children with CF in the U.S. fall in this category. This marketed drug is expected to drive sales growth in the fourth quarter of 2016 and in 2017.
A six-month phase III efficacy study in this patient population is currently ongoing to support EU approval where a regulatory application is slated to be submitted in the first half of 2017. Orkambi is also in a late-stage study in children belonging to the 2–5 years age group.
The company said that pricing and reimbursement approvals for patients qualified for Orkambi outside of the U.S. are expected to drive significant growth in sales in 2017.
Vertex continues to expect operating expenses in the range of $1.18–$1.23 billion in 2016. In addition to working on expanding Kalydeco's and Orkambi’s labels, Vertex is developing VX-661, VX-371 and its next-generation correctors - VX-152 and VX-440.
The company issued a separate press release announcing its plan to start two phase II studies to examine the next-generation correctors VX-440 and VX-152 in people with cystic fibrosis (CF).
BioMarin’s loss estimates have narrowed from 28 cents to 25 cents for 2016 and from $1.16 to $1.11 for 2017 over the last 60 days.
Exelixis’ loss estimates have narrowed from 71 cents to 63 cents for 2016 and from 19 cents to a gain of 3 cents for 2017 over the last 60 days. The company has posted positive earnings surprises twice in the four trailing quarters with an average beat of 9.1%. Its share price has skyrocketed 105% year to date.
Innoviva’s estimates have increased from 60 cents to 62 cents for 2016 and from $1.14 to $1.15 for 2017 over the last 60 days.
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Vertex's (VRTX) Q3 Loss Wider than Expected, Sales Miss
Vertex Pharmaceuticals Inc. (VRTX - Free Report) reported third-quarter 2016 loss of 8 cents per share (including the impact of stock-based compensation expense), wider than the Zacks Consensus Estimate of a loss of 6 cents. However, the loss was narrower than a loss of 40 cents reported in the year-ago quarter.
Excluding stock-based compensation expense, the company reported earnings of 16 cents per share, as against a year-ago loss of 13 cents.
Vertex reported revenues of $414 million in the third quarter, slightly below the Zacks Consensus Estimate of $417 million. However revenues rose 38% from the year-ago period.
CF Franchise Sales Grow Sequentially
Vertex’s third-quarter revenues consisted of sales from cystic fibrosis (CF) products Kalydeco ($175.6 million), Orkambi ($234.0 million), collaborative ($0.03 million) and royalty revenues ($3.8 million).
The company reported a 6% increase in Kalydeco sales in the third quarter from the year-ago period.
Orkambi (lumacaftor/ivacaftor), approved for the treatment of CF in people aged 12 and above with two copies of the F508del mutation, delivered sales of $234.0 million, up 79% year over year.
Adjusted (including stock-based compensation expense) research and development expenses increased 3.2% to $254 million. Third-quarter adjusted (including stock-based compensation expense) selling, general and administrative (SG&A) expenses increased 12.4% to $105.2 million.
Maintains Kalydeco and Orkambi Guidance
Vertex maintained its guidance for Kalydeco and Orkambi revenues for the full year 2016. While Kalydeco revenues are expected in the range of $685–$705 million, Orkambi revenues are expected in the range of $950 million–$990 million.
We remind investors that last month, Vertex lowered its 2016 guidance for Orkambi sales to the range of $950–$990 million from the previously expected $1.0–$1.1 billion. The revision was primarily due to slower-than-anticipated launch of Orkambi in Germany, the close to peak penetration for the approved indication in the U.S., and less-than-expected refills in the months of July and August.
Orkambi was approved for use in children (6–11 years old) by the FDA last month. About 2,400 children with CF in the U.S. fall in this category. This marketed drug is expected to drive sales growth in the fourth quarter of 2016 and in 2017.
A six-month phase III efficacy study in this patient population is currently ongoing to support EU approval where a regulatory application is slated to be submitted in the first half of 2017. Orkambi is also in a late-stage study in children belonging to the 2–5 years age group.
The company said that pricing and reimbursement approvals for patients qualified for Orkambi outside of the U.S. are expected to drive significant growth in sales in 2017.
Vertex continues to expect operating expenses in the range of $1.18–$1.23 billion in 2016. In addition to working on expanding Kalydeco's and Orkambi’s labels, Vertex is developing VX-661, VX-371 and its next-generation correctors - VX-152 and VX-440.
VERTEX PHARM Price, Consensus and EPS Surprise
VERTEX PHARM Price, Consensus and EPS Surprise | VERTEX PHARM Quote
Next-Generation Correctors
The company issued a separate press release announcing its plan to start two phase II studies to examine the next-generation correctors VX-440 and VX-152 in people with cystic fibrosis (CF).
Vertex is a Zacks Rank #5 (Strong Sell) stock. Some better-ranked stocks in the health care sector include BioMarin Pharmaceutical Inc. (BMRN - Free Report) , Innoviva, Inc. (INVA - Free Report) and Exelixis, Inc. (EXEL - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BioMarin’s loss estimates have narrowed from 28 cents to 25 cents for 2016 and from $1.16 to $1.11 for 2017 over the last 60 days.
Exelixis’ loss estimates have narrowed from 71 cents to 63 cents for 2016 and from 19 cents to a gain of 3 cents for 2017 over the last 60 days. The company has posted positive earnings surprises twice in the four trailing quarters with an average beat of 9.1%. Its share price has skyrocketed 105% year to date.
Innoviva’s estimates have increased from 60 cents to 62 cents for 2016 and from $1.14 to $1.15 for 2017 over the last 60 days.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>