-- VX-950 Phase Ib Combination Study Initiated --
-- Target Enrollment in VX-702 Phase II Rheumatoid Arthritis Study Achieved --
CAMBRIDGE, Mass., Oct. 26 /PRNewswire-FirstCall/ -- Vertex Pharmaceuticals
Incorporated (Nasdaq: VRTX) today reported consolidated financial results for
the three months ended September 30, 2005.
"Vertex is on track to meet its clinical and corporate objectives for the
year," said Joshua Boger, Ph.D., Chairman, President and CEO of Vertex
Pharmaceuticals. "We announced today the initiation of a Phase Ib combination
study for our oral HCV protease inhibitor, VX-950. In addition, we announced
that we have reached our target enrollment ahead of schedule in a 300-patient
Phase II study in rheumatoid arthritis (RA) with our p38 MAP kinase inhibitor,
VX-702."
For the quarter ended September 30, 2005, the Company's net loss on a GAAP
basis was $79.6 million, or $0.84 per share. This included a non-cash charge
of approximately $36.3 million as a result of the private exchange of $40.5
million of its 2007 Convertible Senior Subordinated Notes for approximately
2.5 million shares of common stock. The net loss on a GAAP basis for the
quarter ended September 30, 2004 was $38.8 million, or $0.49 per share.
The loss, before charges, for the quarter ended September 30, 2005 was
$41.7 million or $0.44 per share, compared to a loss, before charges, of $36.2
million, or $0.46 per share for the quarter ended September 30, 2004. The
Company's 2005 third quarter non-GAAP loss was characterized by continued
revenue growth, which offset increased development investment as the Company
continues to advance its proprietary drug candidates.
Total revenues for the quarter ended September 30, 2005 increased to $36.2
million from $26.8 million for the same period in 2004, reflecting an increase
in revenue from collaborative agreements and an increase in HIV product
royalties. Research and development expenses for the quarter ended September
30, 2005 were $63.6 million, compared to $48.8 million for the third quarter
of 2004, reflecting the advancement of proprietary drug candidates.
Sales, general and administrative expenses for the quarter ended September
30, 2005 were $10.7 million, compared to $10.6 million for the quarter ended
September 30, 2004.
Other interest expense, net, for the quarter ended September 30, 2005 was
$0.8 million, compared to $2.2 million for the third quarter of 2004. The
decrease in the third quarter of 2005 compared to the same period in 2004 was
due to increased returns from invested funds.
At September 30, 2005, Vertex had approximately $399.2 million in cash,
cash equivalents and available for sale securities, $42.1 million in principal
amount of convertible debt due September 2007 and $232.4 million in principal
amount of convertible debt due February 2011.
Outlook
"Vertex expects substantial clinical newsflow in the remainder of 2005 and
into 2006, reflecting progress with our proprietary drug candidates as well as
those in development with collaborators," stated Dr. Boger. "We anticipate
announcing soon the submission of an investigational new drug application
(IND) for our oral HCV protease inhibitor, VX-950, and the initiation of Phase
II clinical development for this compound in the United States by year-end.
In addition, we announced today the achievement of our target enrollment in a
300-patient, Phase II study of VX-702 in RA, and as a result, we now
anticipate having clinical data for this trial in the second quarter of 2006."
"We are also looking forward to continued progress with our product
candidates directed at HIV infection and cancer," stated Dr. Boger. "In the
third quarter, our collaborator GlaxoSmithKline (GSK) began a Phase IIb
clinical trial of the HIV protease inhibitor VX-385. We expect clinical
investigators to present the first antiviral data for VX-385 in patients at
ICAAC in December. Additionally, our collaborator Merck has three clinical
studies underway with VX-680 in cancer, and we anticipate that the first
clinical data from this program could become available in the coming months."
Recent Clinical and Corporate Highlights
* VX-950: Vertex announced today that it has initiated a 20-patient Phase
Ib study of VX-950 dosed in combination with pegylated interferon in
Europe. Top-line results from the study including safety and viral
kinetic data are anticipated by early first quarter 2006.
The Company also announced today that it has completed key steps toward
submitting an IND to support Phase II development of VX-950 in the
United States, including the completion of a pharmacokinetic study in
healthy volunteers that has confirmed the bioavailability of the tablet
form of VX-950, and the completion of 28-day nonclinical toxicology
studies in two species. Vertex has completed pre-IND consultations with
the U.S. FDA and plans to submit an IND in the next few weeks. The
Company anticipates initiating in the U.S. by year-end a one-month Phase
II clinical trial of VX-950 in combination with pegylated interferon.
In November, Vertex plans to present data on VX-950 at a medical
conference, including the full results of the Phase Ib VX-950
monotherapy study, as well as related pharmacokinetic and viral
sequencing data.
* VX-702: Vertex announced today it has reached its target enrollment of
300 patients in a Phase II clinical study in RA with VX-702.
Approximately 65 patients have thus far completed three months of
treatment. The Company expects top-line data from the study to be
available in the second quarter of 2006. In addition, Vertex's
collaborator Kissei Pharmaceutical has completed regulatory filings in
preparation for Phase I clinical development of VX-702 in Japan, which
is expected to begin by year-end.
* Cystic Fibrosis: Vertex has identified two types of compounds that could
restore the function of the defective cell membrane protein that is
responsible for the progression of cystic fibrosis (CF): "potentiators"
-- compounds that directly increase the gating ability of the defective
ion channel -- and "correctors" -- compounds that enhance the number of
Cystic Fibrosis Transmembrane Regulator (CFTR) channels at the cell
surface. Vertex expects to advance a compound for CF into clinical
development in 2006.
* VX-385: GSK began a Phase IIb study of the HIV protease inhibitor VX-385
in more than 100 patients at centers in the U.S., Canada, Australia and
the E.U. Vertex expects GSK to present Phase IIa antiviral data on VX-
385 at ICAAC in December 2005.
* VX-944: On September 1, 2005, Avalon Pharmaceuticals filed an IND
application with the U.S. FDA for VX-944. The IND was activated in late
September, and Avalon intends to initiate Phase Ib clinical development
of VX-944 in patients with hematologic malignancies.
* In the third quarter, Vertex executed a private exchange with four bond
holders of approximately $40.5 million in aggregate principal amount of
Vertex's 2007 notes plus accrued interest for approximately 2.5 million
shares of common stock.
Full Year 2005 Financial Guidance
This section contains forward-looking guidance about the financial outlook
for Vertex Pharmaceuticals.
"Throughout 2005, Vertex has continued to enhance its financial strength
in preparation for advanced clinical development of proprietary drug
candidates for HCV, inflammation and CF," said Ian Smith, Senior Vice
President and Chief Financial Officer of Vertex. "We raised more than $175
million in gross proceeds from an equity offering earlier this year, and we
recently completed a private exchange of approximately $40.5 million in
convertible notes for common stock, which continues to reduce our near-term
debt obligations. In addition, we announced our intention to target our 2006
development activities in three key areas, which will allow us to focus our
investment as we pursue opportunities to drive shareholder value in 2006."
"We remain confident that we will achieve our 2005 financial guidance,
which is dependent on the signing of new collaborations and the achievement of
milestones in existing collaborations," added Mr. Smith.
Vertex today reiterated its 2005 financial guidance, as previously updated
in its July 27, 2005 press release. The Company anticipates that its 2005
loss, before charges and gains, will be in the range of $140-$150 million.
Non-GAAP Financial Measures
In this press release, Vertex's financial results are provided both in
accordance with generally accepted accounting principles (GAAP) in the United
States and using certain non-GAAP financial measures. In particular, Vertex
provides its third quarter 2005 loss, and guidance for a full year 2005 loss,
excluding charges and gains, all of which are non-GAAP financial measures.
These results are provided as a complement to results provided in accordance
with GAAP because management believes these non-GAAP financial measures help
indicate underlying trends in the Company's business, and uses these non-GAAP
financial measures to establish budgets and operational goals that are
communicated internally and externally, to manage the Company's business and
to evaluate its performance.
About Vertex
Vertex Pharmaceuticals Incorporated is a global biotechnology company
committed to the discovery and development of breakthrough small molecule
drugs for serious diseases. The Company's strategy is to commercialize its
products both independently and in collaboration with major pharmaceutical
companies. Vertex's product pipeline is principally focused on viral
diseases, inflammation, autoimmune diseases and cancer. Vertex co-promotes
the HIV protease inhibitor, Lexiva, with GlaxoSmithKline.
Lexiva is a registered trademark of the GlaxoSmithKline group of
companies.
This press release contains forward-looking statements, including
statements that Vertex expects (i) to meet all of its clinical and corporate
objectives for the year, (ii) anticipates continuing revenue growth to offset,
in part, increasing development costs, (iii) significant clinical newsflow in
2005 and into 2006, reflecting progress with the clinical trials of its
proprietary drug candidates as well as those in development with
collaborators, (iv) to submit an IND for VX-950 and initiate Phase II clinical
development of VX-950 by year-end, (v) to have clinical data from a 300-
patient, Phase II study of VX-702 in rheumatoid arthritis in mid-2006, (vi)
that clinical investigators will present the first antiviral data on VX-385 at
ICAAC in December, (vii) that the first clinical data on VX-680 will be
available in the coming months (viii) that top-line results from a Phase Ib
study of VX-950 will be available by early first quarter 2006, (ix) that its
collaborator Kissei will begin Phase I development of VX-702 in Japan by year-
end, (x) that it will advance a compound for CF into clinical development in
2006, and (xi) that the Company's projected 2005 annual loss, revenue, R&D
expense, SG&A expense and cash position will be within the ranges stated in
the Company's updated financial guidance provided on July 27, 2005 as part of
the Company's second quarter 2005 financial results. While management makes
its best efforts to be accurate in making forward-looking statements, those
statements are subject to risks and uncertainties that could cause Vertex's
actual results to vary materially. Those risks and uncertainties include,
among other things, the risk that any one or more of Vertex's internal and
external drug development programs will not proceed as planned for technical,
scientific or commercial reasons or due to patient enrollment issues or based
on new information from nonclinical or clinical studies or from other sources,
that one or more of the Company's assumptions underlying its revenue
expectations, including clinical and scientific progress that could lead to
milestone payments under existing collaboration agreements or other payments
under new collaborations, will not be realized, that Vertex will be unable to
realize one or more of its financial objectives for 2005, due to any number of
financial, technical or collaboration considerations, that unexpected costs
associated with one of the Company's programs will necessitate a reduction in
its investment in other programs or a change in the Company's financial
projections, that future competitive or other market factors may adversely
impact the commercial potential for the Company's product candidates in HCV
and inflammation, that the Company's drug discovery efforts will not
ultimately result in commercial products or assets that can generate
collaboration revenue, due to scientific, medical or technical developments,
that Vertex will be unable to enter into new collaborative relationships to
support its research and development programs on acceptable terms, or at all,
that the key estimates and assumptions underlying the Company's forward-
looking statements will turn out to be incorrect or not reflective of changing
scientific knowledge or business conditions in the future, and other risks
listed under Risk Factors in Vertex's Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 16, 2005. We disclaim any
intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events, or otherwise, unless
required by law.
Vertex Pharmaceuticals Incorporated
2005 Third Quarter and Nine Month Results
Consolidated Statement of Operations Data
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenues:
Royalties $9,466 $4,403 $23,086 $10,996
Collaborative and other
R&D revenues 26,741 22,425 74,048 51,886
Total revenues $36,207 $26,828 $97,134 $62,882
Costs and expenses:
Royalty payments 2,796 1,466 7,315 3,640
Research and development 63,590 48,790 180,382 137,915
Sales, general &
administrative 10,738 10,600 31,179 30,482
Total costs and expenses 77,124 60,856 218,876 172,037
Other interest expense, net 772 2,189 5,484 5,661
Loss excluding charges for
exchange and retirement of
2007 convertible notes
and restructuring $(41,689) $(36,217) $(127,226) $(114,816)
Basic and diluted loss per
common share excluding
charges for exchange and
retirement of 2007
convertible notes and
restructuring $(0.44) $(0.46) $(1.49) $(1.46)
Charge for exchange of 2007
convertible notes
(Note 1) (36,324) --- (36,324) ---
Charge for retirement of
2007 convertible notes
(Note 2) --- (993) --- (3,446)
Restructuring expense, net
(Note 3) (1,565) (1,561) (1,736) (5,216)
Net loss $(79,578) $(38,771) $(165,286) (123,478)
Basic and diluted net loss
per common share $(0.84) $(0.49) $(1.93) $(1.57)
Basic and diluted weighted
average number of common
shares outstanding 94,590 78,742 85,462 78,403
Note 1: In September 2005, holders of 5% Convertible Subordinated Notes
due 2007 exchanged $40.5 million in aggregate principal amount plus
approximately $1.0 million of accrued interest on the notes for approximately
2.5 million shares of common stock. As a result of the exchange, a non-cash
charge of approximately $36.3 million was incurred. This charge is related to
the incremental shares issued in the transaction over the number that would
have been issued upon conversion of the notes under their original terms.
Note 2: In September 2004, the Company exchanged approximately $79.3
million in aggregate principal amount of 5% Convertible Subordinated Notes due
2007 for approximately $79.3 million in aggregate principal amount of newly
issued 5.75% Convertible Senior Subordinated Notes due 2011. In February
2004, the Company exchanged approximately $153.1 million in aggregate
principal amount of 5% Convertible Subordinated Notes due 2007 for
approximately $153.1 million of newly issued 5.75% Convertible Senior
Subordinated Notes due in 2011.
The September 2004 transaction resulted in a charge of approximately $1.0
million relating to the write-off of the remaining unamortized issuance
charges for the $79.3 million of the 2007 5% convertibles notes, which were
retired. For the nine months ended September 30, 2004, the total charges
related to the write-off of the unamortized issuance charges for the February
and September exchanges was approximately $3.5 million.
Note 3: For the three and nine months ended September 30, 2005 and 2004,
the Company incurred restructuring charges. The net charge for the three
months ended September 30, 2005 was $1.6 million, and principally relates to
an implied interest cost relating to restructuring accrual. For the nine
months ended September 30, 2005, the Company recorded $1.7 million of net
restructuring expense which includes an implied interest cost relating to the
restructuring accrual offset by a credit for reversing a portion of the
restructuring accrual related to the space that Vertex expects to occupy in
the future. For the three and nine months ended September 30, 2004, the
Company recorded $1.6 million and $5.2 million, respectively. Restructuring
and other expense recorded for referenced periods arises from an implied
interest cost relating to the restructuring and other expense accrual. This
expense has been estimated in accordance with FASB 146 "Accounting for Costs
Associated with Exit or Disposal Activities" and is reviewed quarterly for
changes in circumstances.
Vertex Pharmaceuticals Incorporated
2005 Third Quarter Results
Condensed Consolidated Balance Sheet Data
(In thousands)
(Unaudited)
September 30, December 31,
2005 2004
Assets
Cash, cash equivalents and available for
sale securities $399,165 $392,320
Other current assets 25,169 14,392
Property, plant and equipment, net 56,127 64,225
Restricted cash 46,607 49,847
Other noncurrent assets 23,507 24,669
Total assets $550,575 $545,453
Liabilities and Equity
Other current liabilities $49,975 $50,161
Accrued restructuring expense 39,324 55,843
Deferred revenue 33,417 66,086
Collaborator development loan (due 2008) 19,997 19,997
Other long term obligations --- 2,925
Convertible notes (due 2007) 42,102 82,552
Convertible notes (due 2011) 232,448 232,448
Other Stockholders' equity 1,084,765 821,608
Accumulated deficit (951,453) (786,167)
Total liabilities and equity $550,575 $545,453
Conference Call and Webcast: Third Quarter 2005 Financial Results:
Vertex Pharmaceuticals will host a conference call today, October 26, 2005 at
5:00 p.m. EDT to review financial results and recent developments. This call
will be broadcast via the Internet at http://www.vrtx.com in the investor
center. Alternatively, to listen to the call on the telephone, dial (800)
374-0296 (U.S. and Canada) or (706) 634-2224 (International). Alternatively,
Vertex is providing a podcast MP3 file available for download on the Vertex
website, http://www.vrtx.com.
The call will be available for replay via telephone commencing October 26,
2005 at 8:00 p.m. EDT running through 5:00 p.m. ET on November 2, 2005. The
replay phone number for the U.S. and Canada is (800) 642-1687. The
international replay number is (706) 645-9291 and the conference ID number is
1170954. Following the live webcast, an archived version will be available on
Vertex's website until 5:00 p.m. ET on November 9, 2005.
Vertex's press releases are available at http://www.vrtx.com.
Vertex Contacts:
Lynne H. Brum, Vice President, Corporate Communications
and Financial Planning, (617) 444-6614
Michael Partridge, Director, Corporate Communications, (617) 444-6108
Lora Pike, Manager, Investor Relations, (617) 444-6755
SOURCE Vertex Pharmaceuticals Incorporated
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http://www.vrtx.com
Company News On-Call:
http://www.prnewswire.com/comp/938395.html
CONTACT:
Lynne H. Brum, Vice President, Corporate
Communications and Financial Planning, +1-617-444-6614, or
Michael Partridge, Director, Corporate Communications,
+1-617-444-6108, Lora Pike, Manager, Investor Relations,
+1-617-444-6755
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