Large-cap biopharmaceutical company Vertex Pharmaceuticals (NASDAQ: VRTX ) is right in the middle of a product transition from a dual focus on hepatitis C and cystic fibrosis to a full focus on cystic fibrosis – and its first-quarter results demonstrate those struggles.
For the quarter, Vertex reported a 64% decline in revenue, to $118.5 million, despite revenue from cystic fibrosis drug Kalydeco soaring 61%, to $99.5 million. Its huge revenue drop came from Vertex pulling away from marketing its hepatitis C therapy Incivek, which saw product sales fall to just $3.9 million. (Keep in mind this was the previous fastest-growing drug to ever reach $1 billion in sales.) Comparatively, Incivek produced $205.6 million in sales in the first-quarter last year.
The good news here is that focusing solely on cystic fibrosis dropped Vertex's operating expenses to $334.8 million from $766.7 million in the prior-year period, although research and development expenses rose 10%.
Vertex's adjusted bottom-line results reversed course from a $5.7 million profit, or $0.03 per share, in the year-ago period to a huge $151.4 million loss, or $0.65 per share. Vertex blamed the loss on reduced sales of Incivek and lower royalty revenue from Incivo. Vertex also ended the quarter with $1.32 billion in cash.
Looking ahead, Vertex is forecasting full-year revenue of $520 million-$550 million, excluding revenue from Incivek and its Incivo royalties, with Kalydeco revenue of $470 million-$500 million. Operating expenses are anticipated to be in the $890 million-$930 million range.
Subsequent to its earnings release, Vertex also announced that the addition of VX-661 to Kalydeco improves lung function in cystic fibrosis patients who are heterozygous to the F508del and G551D mutations in a phase 2 proof-of-concept study. Treatment involving this combo produced a mean within-group relative improvement in lung function of 7.3%.