Cystic fibrosis-focused drug developer Vertex Pharmaceuticals (NASDAQ:VRTX) reported a nice reversal in its fourth-quarter earnings report after the closing bell this evening despite a dramatic drop in hepatitis-C medication Incivek.
For the fourth quarter, Vertex reported a 5.1% increase in year-over-year revenue to $351.2 million as it delivered a $0.19-per-share profit, reversing a year-ago loss of $0.35.
Vertex reported a huge increase in its collaborative revenue with Johnson & Johnson (NYSE:JNJ) subsidiary Janssen Pharmaceuticals as it sold its future royalty rights to Incivo for $152 million in November. This was the primary reason revenue increased by 5% as the actual Incivo royalty revenue recognized for the quarter decreased to $26.4 million from $36.8 million.
Cystic fibrosis drug Kalydeco, which is Vertex's primary focus, saw its sales rise by 87.2% to $109.5 million, helped primarily by additional usage in Europe following reimbursement discussions in that region. Vertex notes that future revenue growth of Kalydeco is dependent on reimbursement discussions in Australia and Canada this year, and the potential expansion of Kalydeco to different CF mutations.
However, sales of hepatitis-C drug Incivek were hit hard. The emergence of oral substitutes which aren't required to be administered with interferon has made Incivek nearly obsolete with sales dropping to a mere $19.3 million in the latest quarter from $222.8 million in the year-ago quarter. As a reminder, Incivek was the quickest drug to reach the $1 billion sales milestone in history!
Looking ahead, Vertex anticipates fiscal 2014 revenue to range between $570 million and $600 million, representing a drop-off of more than 50% from the $1.21 billion in revenue reported this year, as Kalydeco's net revenue is expected to rise to $470 million to $500 million from the $371.3 million reported this year. Research and development expenses are also expected to drop to a range of $665 million to $695 million from the $918.8 million in R&D in 2013.