Biotech Stock to Watch: Vertex Pharma. Posts Q2 Results

Vertex Pharmaceuticals Inc.’s (VRTX) second-quarter 2014 loss came in at 79 cents per share (including stock-based compensation expense), much wider than the loss of 21 cents reported in the year-ago quarter. Second quarter 2014 loss was also wider than the Consensus Estimate of a loss of 74 cents.

Excluding the impact of stock-based compensation expense, second quarter 2014 loss was 61 cents per share as against the year-ago loss of 3 cents per share.

Vertex Pharma reported revenues of $121.9 million for the second quarter of 2014 (excluding hepatitis C virus/HCV revenues and royalties). Revenues were below the Consensus Estimate of $128 million. Vertex Pharma’s second quarter revenues consisted of sales from cystic fibrosis (CF) product Kalydeco ($113.1 million) and other revenues ($8.8 million).

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Vertex Pharma reported a 14.2% increase in Kalydeco sales in the second quarter 2014 from the year-ago period. Rapid uptake among eligible patients in Europe and continued growth in the U.S. drove Kalydeco sales in the reported quarter. U.S. sales benefited from the approval for eight additional mutations. EU approval for this patient population should come in the second half of the year.

Additional growth should materialize with the conclusion of reimbursement discussions in Australia for eligible patients with the G551D mutation. Kalydeco revenues should also benefit from Vertex Pharma’s label expansion efforts. Adjusted (including stock-based compensation expense) research and development (R&D) expenses for the quarter decreased 4.7% to $206.8 million.

Vertex Pharma continues to expect Kalydeco revenues in the range of $470 million to $500 million in 2014. The guidance assumes the conclusion of reimbursement discussions in Australia, revenues from Canada and potential label expansion of Kalydeco.

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Vertex Pharma is going through a transition period given its decision to focus on its CF franchise and drop investment in the hepatitis C virus (HCV) franchise. Kalydeco is doing well and Vertex Pharma is working on expanding the product’s label. Approval for the Kalydeco – lumacaftor combination would provide access to a huge number of eligible patients.

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