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Vertex Reports Third Quarter 2012 Financial Results and Recent Progress in Development Programs



  Vertex Reports Third Quarter 2012 Financial Results and Recent Progress in
  Development Programs

 -Third quarter 2012 total revenues of $336 million, including third quarter
    2012 net product revenues of approximately $254 million for INCIVEK in
         hepatitis C and $49 million for KALYDECO in cystic fibrosis-

-Cystic Fibrosis: Three ongoing Phase 3 label expansion studies for ivacaftor
monotherapy; pivotal program for VX-809 and ivacaftor combination expected to
                             begin in early 2013-

 -Hepatitis C: Planned start of first all-oral Phase 2 study of VX-135 by the
   end of 2012; agreements with GlaxoSmithKline and Janssen Pharmaceuticals
  announced today provide opportunity to study VX-135 in additional all-oral
                         regimens in Phase 2 studies-

Business Wire

CAMBRIDGE, Mass. -- November 01, 2012

Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) today reported consolidated
financial results for the quarter ended September 30, 2012.

Vertex reported total revenues of approximately $336 million for the third
quarter of 2012, including net product revenues of approximately $254 million
from INCIVEK^® (telaprevir) and approximately $49 million from KALYDECO^TM
(ivacaftor). Royalty revenues related to the sale of INCIVO^® in Europe by our
collaborator were approximately $20 million for the third quarter of 2012, and
the company reported $1.3 billion in cash, cash equivalents and marketable
securities as of September 30, 2012. In the third quarter of 2012, the company
reported a GAAP net loss of approximately $(58) million, or $(0.27) per share,
and non-GAAP net income of approximately $28 million, or $0.13 per diluted
share. Vertex today also provided updates on a number of ongoing and planned
trials in cystic fibrosis, hepatitis C, rheumatoid arthritis and influenza. In
separate press releases issued earlier today, Vertex announced that it has
entered into two non-exclusive agreements to conduct Phase 2 proof-of-concept
studies of its nucleotide analogue hepatitis C virus (HCV) polymerase
inhibitor VX-135 in combination with simeprevir (TMC435), a protease inhibitor
being jointly developed by Janssen R&D Ireland and Medivir AB, and with
GSK2336805, an NS5A inhibitor in development by GlaxoSmithKline (GSK), for the
treatment of hepatitis C.

“In the third quarter, we made significant progress across our broad pipeline
of potential medicines,” said Jeffrey Leiden, M.D., Ph.D., Chair, President
and Chief Executive Officer of Vertex. “In hepatitis C, we are advancing
rapidly with our plans to evaluate multiple all-oral regimens of VX-135, both
with medicines in our own pipeline and, as we announced earlier today, in
collaboration with other companies. We are also advancing toward our goal to
help more people with cystic fibrosis with the recent initiation of multiple
label-expansion studies for ivacaftor and the planned start of pivotal
development early next year for a combination of VX-809 and ivacaftor.

“Importantly, we are advancing our business while keeping a focus on financial
discipline and prioritization to allow us to continue investing in key
research and development programs that may produce transformative medicines
for patients in the years to come,” concluded Dr. Leiden.

Cystic Fibrosis (CF)

  * Ongoing global launch of KALYDECO: KALYDECO (ivacaftor) is approved in the
    U.S. and in all 27 EU countries for people with cystic fibrosis ages 6 and
    older who have at least one copy of the G551D mutation in the cystic
    fibrosis transmembrane conductance regulator (CFTR) gene. Currently,
    Vertex is working with individual countries in Europe to make KALYDECO
    available to eligible patients as soon as possible. Vertex has submitted
    marketing applications for KALYDECO in Canada and Australia that are
    currently under review with the respective regulatory agencies.
  * Efforts to help more CF patients with ivacaftor monotherapy: There are
    three Phase 3 label expansion trials and one Phase 2 proof-of-concept
    study underway for ivacaftor monotherapy:

       * A Phase 3 study of ivacaftor is ongoing in people with CF ages 6 and
         older who have at least one copy of the R117H mutation. Approximately
         3 percent of people with CF in the U.S. have at least one R117H
         mutation.
       * A Phase 3 study of ivacaftor is ongoing in people with CF ages 6 and
         older who have at least one non-G551D CFTR gating mutation.
         Approximately 1 percent of people with CF in the U.S. have at least
         one non-G551D gating mutation.
       * A Phase 3 study of ivacaftor was recently initiated in children with
         CF ages 2 to 5 who have a gating mutation, with enrollment targeted
         to begin by the end of 2012.
       * A Phase 2 proof-of-concept study is underway evaluating ivacaftor in
         people with clinical evidence of residual CFTR function. This is the
         first study to evaluate the efficacy of ivacaftor based on a person's
         clinical symptoms and characteristics, or phenotype, rather than
         solely on their CFTR mutation, or genotype. Between 5 and 10 percent
         of people with CF in the U.S. may have residual CFTR function.

  * Combination therapy for people with two copies of the F508del mutation:
    Based on data from the second part of an ongoing Phase 2 study and pending
    discussions with regulatory agencies, Vertex is preparing to start a
    pivotal program in early 2013 evaluating combination therapy with VX-809
    and ivacaftor in people ages 12 and older with two copies of the F508del
    mutation, the most common form of cystic fibrosis. A third part (Cohort 3)
    of the Phase 2 study is evaluating the pharmacokinetics, safety and
    tolerability of a twice-daily (q12h) combination of VX-809 (400mg) and
    ivacaftor (250mg). Cohort 3 is fully enrolled, and Vertex expects to use
    data from this part of the study to support the pivotal program for VX-809
    and ivacaftor. Additional data are expected in the first half of 2013 from
    a Phase 2 study of combination therapy with VX-661, another CFTR
    corrector, and ivacaftor.
  * Research to identify additional CF treatment regimens: Vertex has an
    active and ongoing research program that has identified next-generation
    correctors. This research is being conducted as part of the company’s
    collaboration with Cystic Fibrosis Foundation Therapeutics, Inc. and is
    focused on the accelerated discovery and development of correctors that
    could play a role in a variety of future combination treatments, including
    a dual corrector approach and other combinations with ivacaftor.

Hepatitis C

  * Development-stage agreements: Vertex announced earlier today that it has
    entered into two separate, non-exclusive agreements with GSK and Janssen
    Pharmaceuticals, Inc. to evaluate multiple all-oral treatment regimens for
    people with genotype 1 hepatitis C. The collaboration with GSK will
    evaluate Vertex’s nucleotide analogue HCV polymerase inhibitor VX-135 in
    combination with GSK’s NS5A inhibitor GSK2336805, and the collaboration
    with Janssen will evaluate VX-135 in combination with Janssen’s protease
    inhibitor simeprevir (TMC435). Additional details were provided today in
    separate press releases.
  * Additional all-oral studies with VX-135: Based on positive viral kinetic
    data for VX-135 announced in the third quarter, Vertex plans to conduct
    12-week Phase 2 all-oral studies of VX-135, including a study in
    combination with ribavirin and a study in combination with telaprevir,
    pending regulatory approval. The study in combination with ribavirin is
    expected to begin by the end of 2012, followed by the study with
    telaprevir in early 2013. Data on VX-135 will be presented at The Liver
    Meeting^®, the 63rd Annual Meeting of the American Association for the
    Study of Liver Diseases (AASLD) in November 2012.
  * Telaprevir twice-daily dosing data: Data from a study examining
    twice-daily dosing (BID) for telaprevir will be presented at the upcoming
    AASLD annual meeting in Boston. The results demonstrated that twice-daily
    dosing of telaprevir in combination with peginterferon alfa and ribavirin
    compared to dosing telaprevir every eight hours, the currently approved
    dosing schedule, achieved similar sustained virological response (SVR12)
    rates, or viral cure rates, thereby meeting the study’s primary objective
    of non-inferiority. Adverse events were generally similar between both
    arms of the study and consistent with previous studies. Vertex plans to
    submit data supporting this new dosing regimen to the U.S. Food and Drug
    Administration (FDA) in 2013 for potential inclusion in the telaprevir
    label in the U.S.

Pipeline Programs

  * Phase 2b study of VX-509 underway in rheumatoid arthritis: Enrollment is
    ongoing in the U.S. and Europe in a Phase 2b 350-person study of VX-509,
    an oral, selective JAK3 inhibitor, being evaluated in combination with
    methotrexate for people with moderate to severe rheumatoid arthritis (RA).
    Vertex expects to start additional studies of VX-509 in other
    immune-mediated inflammatory diseases in 2013.
  * Ongoing Phase 2 study of VX-787 in influenza: Vertex expects final data
    from an ongoing Phase 2 proof-of-concept study of VX-787 in experimental
    influenza by the end of 2012. VX-787 is an investigational medicine that
    is designed to treat influenza A, including recent H1N1 (pandemic) and
    H5N1 (avian) influenza strains.

Third Quarter 2012 Financial Results

Total Revenues: Total  revenues were $336.0 million for the third quarter of
2012, compared with $659.2 million for the third quarter of 2011, which
included one-time milestone revenue of $200.0 million from Janssen. Key
components of total revenues for the third quarter 2012 were:

  * Net Product Revenues from INCIVEK: Net product revenues from INCIVEK were
    $254.3 million, compared with $419.6 for the third quarter of 2011.
  * Net Product Revenues from KALYDECO: Net product revenues from KALYDECO
    were $49.2 million. Because KALYDECO was approved in January 2012, there
    were no net product revenues from KALYDECO for the third quarter of 2011.
  * Royalty Revenues: Vertex recognized $25.6 million in royalty revenues,
    including $20.0 million in INCIVO royalty revenues from our collaborator
    Janssen, compared to $8.5 for the third quarter of 2011. INCIVO was
    approved in Europe in September 2011.
  * Collaborative Revenues: Vertex recognized $6.9 million in collaborative
    revenues, compared to $231.1 million for the third quarter of 2011, which
    included an aggregate of $200.0 million in milestone revenue from Janssen
    related to the approval and launch of INCIVO in Europe.

Cost of Product Revenues: Cost of product revenues was $30.7 million in the
third quarter of 2012, compared to $35.3 million for the third quarter of
2011.

Research and Development (R&D) Expenses: R&D expenses were $200.2 million in
the third quarter of 2012, including $21.3 million of Vertex stock-based
compensation expense and Alios expenses related to the accounting for the
collaboration with Vertex, compared to $189.1 million for the third quarter of
2011, including $20.9 million of Vertex stock-based compensation expense and
Alios expenses related to the accounting for the collaboration with Vertex.

Sales, general and administrative (SG&A) expenses: SG&A expenses were $97.7
million in the third quarter of 2012, including $10.8 million of Vertex
stock-based compensation expense and Alios expenses related to the accounting
for the collaboration with Vertex, compared to $110.7 million for the third
quarter of 2011, including $13.2 million of Vertex stock-based compensation
expense and Alios expenses related to the accounting for the collaboration
with Vertex.

GAAP Net Income (Loss) Attributable to Vertex: Vertex’s GAAP net loss was
$(57.5) million, or $(0.27) per share, for the third quarter of 2012 compared
to the GAAP net income of $221.1 million, or $1.02 per diluted share, for the
third quarter of 2011.

Non-GAAP Net Income Attributable to Vertex: Vertex’s non-GAAP net income was
$28.2 million, or $0.13 per diluted share, for the third quarter of 2012,
excluding $28.2 million in stock-based compensation expense and restructuring
expense and a $57.6 million charge related to an increase in the fair value of
expected future payments under Vertex’s collaboration with Alios. The non-GAAP
net income was $151.2 million, or $0.70 per diluted share, for the third
quarter of 2011, excluding $28.9 million in stock-based compensation expense,
$(0.4) million in restructuring expense (credit), $188.9 million related to
certain September 2009 financial transactions, a $73.1 million intangible
asset impairment charge, net of tax, and a $17.5 million charge related to an
increase in the fair value of expected future payments under Vertex’s
collaboration with Alios.

Cash Position: As of September 30, 2012, Vertex had $1.3 billion in cash, cash
equivalents and marketable securities compared to cash, cash equivalents and
marketable securities on December 31, 2011 of $968.9 million.

2012 Financial Guidance

This section contains forward-looking guidance about the financial outlook for
Vertex Pharmaceuticals.

Full-Year INCIVEK Revenues: Vertex is today reiterating its guidance for
full-year 2012 INCIVEK net revenues to be in the range of $1.1 billion to
$1.25 billion. This guidance was initially established on July 30, 2012.

Total Operating Expenses: Vertex is also reiterating its guidance for 2012
total operating expenses, excluding cost of revenues, stock-based compensation
expense and Alios expenses related to the accounting for the collaboration
with Vertex, to be in the range of $1.03 billion to $1.13 billion. This
guidance was initially established on February 2, 2012.

Non-GAAP Financial Measures

In this press release, Vertex's financial results and financial guidance are
provided both in accordance with accounting principles generally accepted in
the United States (GAAP) and using certain non-GAAP financial measures. In
particular, Vertex provides its third quarter and first nine months of 2012
and 2011 net income (loss) excluding stock-based compensation expense,
restructuring expense, inventory write-off, revenues and expenses related to
certain September 2009 financial transactions, intangible asset impairment
charges, net of tax and charges related to changes in the fair value of
expected future payments under Vertex’s collaboration with Alios. 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, are important in
comparing current results with prior period results and provide additional
information regarding its financial position. Management also uses these
non-GAAP financial measures to establish budgets and operational goals that
are communicated internally and externally and to manage the company's
business and to evaluate its performance. A reconciliation of the non-GAAP
financial results to GAAP financial results is included in the attached
financial statements.

 
Vertex Pharmaceuticals Incorporated
Third Quarter and Nine Month Results
Consolidated Statements of Operations Data
(in thousands, except per share amounts)
(unaudited)
 
                                Three Months Ended     Nine Months Ended
                                September 30,          September 30,
                                2012        2011       2012         2011
Revenues:
Product revenues, net           $303,501    $419,595   $1,052,149   $494,130
Royalty revenues                25,586      8,539      98,047       24,610
Collaborative revenues (Note    6,919       231,066    42,852       328,546
2)
Total revenues                  336,006     659,200    1,193,048    847,286
                                                                     
Costs and expenses:
Cost of product revenues        30,680      35,285     161,147      40,689
(Note 3)
Royalty expenses                7,856       3,121      31,023       9,689
Research and development        200,161     189,052    593,076      521,268
expenses (R&D)
Sales, general &
administrative expenses         97,684      110,654    326,344      278,840
(SG&A)
Restructuring expense           696         (419)      1,650        1,082
(credit)
Intangible asset impairment     —           105,800    —            105,800
charge (Note 4)
Total costs and expenses        337,077     443,493    1,113,240    957,368
                                                                     
Income (loss) from operations   (1,071)     215,707    79,808       (110,082)
                                                                     
Net interest expense (Note 2)   (4,041)     (6,982)    (11,417)     (24,341)
Change in fair value of
derivative instruments (Note    —           (8,115)    —            (15,933)
2)
Income (loss) before
provision for (benefit from)    (5,112)     200,610    68,391       (150,356)
income taxes
Provision for (benefit from)    21,355      (27,842)   41,450       (3,394)
income taxes (Note 4)
Net income (loss)               (26,467)    228,452    26,941       (146,962)
Net loss (income)
attributable to                 (31,076)    (7,342)    (57,825)     17,907
noncontrolling interest (Note
1)
Net income (loss)               $(57,543)   $221,110   $(30,884)    $(129,055)
attributable to Vertex
                                                                     
Net income (loss) per share
attributable to Vertex common
shareholders:
Basic                           $(0.27)     $1.06      $(0.15)      $(0.63)
Diluted                         $(0.27)     $1.02      $(0.15)      $(0.63)
                                                                     
Shares used in per share
calculations:
Basic                           213,767     206,002    211,053      204,262
Diluted                         213,767     219,349    211,053      204,262
                                                                     

 
Reconciliation of GAAP to Non-GAAP Financial Information-Third Quarter
(in thousands, except per share amounts)
(unaudited)
 
Three Months
Ended            Adjustments
September 30,
2012
                                                                                     Intangible
                                           Stock-based                September      Asset
                 GAAP        Alios         Compensation   Inventory   2009           Impairment   Restructuring   Non-GAAP
                             Transaction   Expense        Write-off   Financial      Charge,      Expense
                                                                      Transactions   Net of
                                                                                     Tax
Income (loss)
from             $(1,071)    $4,624        $27,484        $—          $—             $—           $696            $31,733
operations
Other income     (4,041)     466           —              —           —              —            —               (3,575)
and expenses
Income (loss)
before
provision for    (5,112)     5,090         27,484         —           —              —            696             28,158
(benefit from)
income taxes
Provision for
(benefit from)   21,355      (21,394)      —              —           —              —            —               (39)
income taxes
Net income       (26,467)    26,484        27,484                     —              —            696             28,197
(loss)
Net loss
(income)
attributable
to               (31,076)    31,076        —              —           —              —            —               —
noncontrolling
interest
(Alios)
Net income
(loss)           $(57,543)   $57,560       $27,484        $—          $—             $—           $696            $28,197
attributable
to Vertex
                                                                                                                   
Net income
(loss) per
diluted share
attributable     $(0.27)                                                                                          $0.13
to Vertex
common
shareholders
(Note 5)
                                                                                                                   
                                                                                                                   
Three Months
Ended            Adjustments
September 30,
2011
                                                                                     Intangible
                                           Stock-based                September      Asset
                 GAAP        Alios         Compensation   Inventory   2009           Impairment   Restructuring   Non-GAAP
                             Transaction   Expense        Write-off   Financial      Charge,      Expense
                                                                      Transactions   Net of
                                                                                     Tax
Income (loss)
from             $215,707    $5,258        $28,886        $—          $(200,000)     $105,800     $(419)          $155,232
operations
Other income     (15,097)    —             —              —           11,075         —            —               (4,022)
and expenses
Income (loss)
before
provision for    200,610     5,258         28,886         —           (188,925)      105,800      (419)           151,210
(benefit from)
income taxes
Provision for
(benefit from)   (27,842)    (4,850)       —              —           —              32,692       —               —
income taxes
Net income       228,452     10,108        28,886         —           (188,925)      73,108       (419)           151,210
(loss)
Net loss
(income)
attributable
to               (7,342)     7,342         —              —           —              —            —               —
noncontrolling
interest
(Alios)
Net income
(loss)           $221,110    $17,450       $28,886        $—          $(188,925)     $73,108      $(419)          $151,210
attributable
to Vertex
                                                                                                                   
Net income
(loss) per
diluted share
attributable     $1.02                                                                                            $0.70
to Vertex
common
shareholders
(Note 5)
                                                                                                                   

 
Reconciliation of GAAP to Non-GAAP Financial Information-Nine Month
(in thousands, except per share amounts)
(unaudited)
                
Nine Months
Ended            Adjustments
September 30,
2012
                                                                                      Intangible
                                            Stock-based                September      Asset
                 GAAP         Alios         Compensation   Inventory   2009           Impairment   Restructuring   Non-GAAP
                              Transaction   Expense        Write-off   Financial      Charge,      Expense
                                                                       Transactions   Net of
                                                                                      Tax
Income (loss)
from             $79,808      $14,356       $86,280        $78,000     $—             $—           $1,650          $260,094
operations
Other income     (11,417)     225           —              —           —              —            —               (11,192)
and expenses
Income (loss)
before
provision for    68,391       14,581        86,280         78,000      —              —            1,650           248,902
(benefit from)
income taxes
Provision for
(benefit from)   41,450       (40,354)      —              1,239       —              —            —               2,335
income taxes
Net income       26,941       54,935        86,280         76,761      —              —            1,650           246,567
(loss)
Net loss
(income)
attributable
to               (57,825)     57,825        —              —           —              —            —               —
noncontrolling
interest
(Alios)
Net income
(loss)           $(30,884)    $112,760      $86,280        $76,761     $—             $—           $1,650          $246,567
attributable
to Vertex
                                                                                                                    
Net income
(loss) per
diluted share
attributable     $(0.15)                                                                                           $1.14
to Vertex
common
shareholders
(Note 5)
                                                                                                                    
                  
Nine Months
Ended            Adjustments
September 30,
2011
                                                                                      Intangible
                                            Stock-based                               Asset
                 GAAP         Alios         Compensation   Inventory   September      Impairment   Restructuring   Non-GAAP
                              Transaction   Expense        Write-off   2009           Charge,      Expense
                                                                       Financial      Net of
                                                                       Transactions   Tax
Income (loss)
from             $(110,082)   $6,059        $88,644        $ —         $(250,000)     $105,800     $1,082          $(158,497)
operations
Other income     (40,274)     —             —              —           29,690         —            —               (10,584)
and expenses
Income (loss)
before
provision for    (150,356)    6,059         88,644         —           (220,310)      105,800      1,082           (169,081)
(benefit from)
income taxes
Provision for
(benefit from)   (3,394)      (29,298)      —              —           —              32,692       —               —
income taxes
Net income       (146,962)    35,357        88,644         —           (220,310)      73,108       1,082           (169,081)
(loss)
Net loss
(income)
attributable
to               17,907       (17,907)      —              —           —              —            —               —
noncontrolling
interest
(Alios)
Net income
(loss)           $(129,055)   $17,450       $88,644        $—          $(220,310)     $73,108      $1,082          $(169,081)
attributable
to Vertex
                                                                                                                    
Net income
(loss) per
diluted share
attributable     $(0.63)                                                                                           $(0.83)
to Vertex
common
shareholders
(Note 5)
                                                                                                                    

 
Condensed Consolidated Balance Sheets Data
(in thousands)
(unaudited)
 
                                                  September 30,   December 31,
                                                  2012            2011
 
                                                   
Assets
Cash, cash equivalents and marketable             $1,298,542      $968,922
securities
Restricted cash and cash equivalents (Alios)      74,954          51,878
(Note 1)
Accounts receivable, net                          139,629         183,135
Inventories (Note 3)                              86,275          112,430
Other current assets                              35,123          14,889
Property and equipment, net                       347,249         133,176
Restricted cash                                   32,166          34,090
Intangible assets (Note 4)                        663,500         663,500
Goodwill (Note 4)                                 30,992          30,992
Other non-current assets                          10,393          11,268
Total assets                                      $2,718,823      $2,204,280
                                                                   
                                                                   
Liabilities and Shareholders’ Equity
Other liabilities                                 $619,527        $405,616
Accrued restructuring expense                     24,155          26,313
Deferred tax liability (Note 4)                   279,466         243,707
Deferred revenues                                 130,929         163,132
Convertible notes (due 2015)                      400,000         400,000
Noncontrolling interest (Alios) (Note 1)          237,013         178,669
Shareholders’ equity (Vertex)                     1,027,733       786,843
Total liabilities and shareholders’ equity        $2,718,823      $2,204,280
Common shares outstanding                         216,342         209,304
                                                                   

Note 1: The company has consolidated the financial statements of its
collaborator Alios BioPharma, Inc., as of September 30, 2012 and December 31,
2011, for the three and nine months ended September 30, 2012, and for the
period from June 13, 2011 through September 30, 2011. The company’s interest
and obligations with respect to Alios’ assets and liabilities are limited to
those accorded to the company in its collaboration agreement with Alios.
Restricted cash and cash equivalents (Alios) reflects Alios’ cash and cash
equivalents, which Vertex does not have any interest in and which will not be
used to fund the collaboration. Increases (decreases) in the fair value of
contingent milestone and royalty payments result in gains (losses)
attributable to the noncontrolling interest (Alios), which decrease (increase)
net income attributable to Vertex on the Consolidated Statements of Operations
Data.

Note 2: In the three and nine months ended September 30, 2011, a portion of
the collaborative revenues, the change in fair value of derivative instruments
and a portion of the net interest expense reflected in the Consolidated
Statements of Operations Data relate to two financial transactions that the
company entered into in September 2009 relating to milestone payments under
the company’s collaboration agreement with Janssen Pharmaceutica, N.V. In the
three and nine months ended September 30, 2011, the company earned $200.0
million and $250.0 million, respectively in milestone revenue from its
collaborator, Janssen, which are reflected in total collaborative revenues in
the Condensed Consolidated Statements of Operations Data.

Note 3: In the second quarter of 2012, the company recorded within cost of
product revenues a $78.0 million lower of cost or market charge for excess and
obsolete INCIVEK inventories.

Note 4: The intangible assets, the goodwill and the deferred tax liability
reflected in the Condensed Consolidated Balance Sheets Data relate to the
company’s acquisition of ViroChem Pharma Inc. in 2009 and the company’s
collaboration agreement with Alios in June 2011.

In the third quarter of 2011, the company recorded an impairment charge of
$105.8 million related to VX-759, a back-up HCV polymerase inhibitor to VX-222
that had been discovered by ViroChem Pharma Inc. The fair value of VX-759
following the impairment charge was zero. In connection with this impairment
charge, the company recorded a benefit from income taxes of $32.7 million
resulting in a net effect on its income (loss) related to this impairment of
$73.1 million in the three and nine months ended September 30, 2011.

Note 5: Shares used in Non-GAAP net income (loss) per diluted share
attributable to Vertex common shareholders were 217,797,000 and 219,349,000
for the three months ended September 30, 2012 and 2011, respectively, and
214,580,000 and 204,262,000 for the nine months ended September 30, 2012 and
2011, respectively.

About Vertex

Vertex creates new possibilities in medicine. Our team discovers, develops and
commercializes innovative therapies so people with serious diseases can lead
better lives.

Vertex scientists and our collaborators are working on new medicines to cure
or significantly advance the treatment of hepatitis C, cystic fibrosis,
rheumatoid arthritis and other life-threatening diseases.

Founded more than 20 years ago in Cambridge, Mass., we now have ongoing
worldwide research programs and sites in the U.S., U.K. and Canada. Today,
Vertex has more than 2,000 employees around the world, and for three years in
a row, Science magazine has named Vertex one of its Top Employers in the life
sciences.

Vertex's press releases are available at www.vrtx.com.

INDICATION AND IMPORTANT SAFETY INFORMATION FOR KALYDECO (ivacaftor)

KALYDECO (150mg tablets) is indicated for the treatment of cystic fibrosis
(CF) in patients age 6 years and older who have a G551D mutation in the CFTR
gene.

KALYDECO is not for use in people with CF due to other mutations in the CFTR
gene. It is not effective in CF patients with two copies of the F508del
mutation (F508del/F508del) in the CFTR gene.

High liver enzymes (transaminases, ALT and AST) have been reported in patients
receiving KALYDECO. It is recommended that ALT and AST be assessed prior to
initiating KALYDECO, every 3 months during the first year of treatment, and
annually thereafter. Patients who develop increased transaminase levels should
be closely monitored until the abnormalities resolve. Dosing should be
interrupted in patients with ALT or AST of greater than 5 times the upper
limit of normal. Following resolution of transaminase elevations, consider the
benefits and risks of resuming KALYDECO dosing. Moderate transaminase
elevations are common in subjects with CF. Overall, the incidence and clinical
features of transaminase elevations in clinical trials was similar between
subjects in the KALYDECO and placebo treatment groups. In the subset of
patients with a medical history of elevated transaminases, increased ALT or
AST have been reported more frequently in patients receiving KALYDECO compared
to placebo.

Use of KALYDECO with medicines that are strong CYP3A inducers such as the
antibiotics rifampin and rifabutin; seizure medications (phenobarbital,
carbamazepine, or phenytoin); and the herbal supplement St. John's Wort
substantially decreases exposure of KALYDECO, which may diminish
effectiveness. Therefore, co-administration is not recommended.

The dose of KALYDECO must be adjusted when concomitantly used with potent and
moderate CYP3A inhibitors.

KALYDECO can cause serious adverse reactions including abdominal pain and high
liver enzymes in the blood. The most common side effects associated with
KALYDECO include headache; upper respiratory tract infection (the common
cold), including sore throat, nasal or sinus congestion, and runny nose;
stomach (abdominal) pain; diarrhea; rash; and dizziness. These are not all the
possible side effects of KALYDECO. A list of the adverse reactions can be
found in the full product labeling for each country where KALYDECO is
approved. Patients should tell their healthcare providers about any side
effect that bothers them or doesn't go away.

Please see full U.S. Prescribing Information for KALYDECO
at www.KALYDECO.com and the EU Summary of Product Characteristics for KALYDECO
at http://goo.gl/N3Tz4.

INDICATION AND IMPORTANT SAFETY INFORMATION FOR INCIVEK (telaprevir)

Indication

INCIVEK® (telaprevir) is a prescription medicine used with the medicines
peginterferon alfa and ribavirin to treat chronic (lasting a long time)
hepatitis C genotype 1 infection in adults with stable liver problems, who
have not been treated before or who have failed previous treatment. It is not
known if INCIVEK is safe and effective in children under 18 years of age.

Important Safety Information

INCIVEK should always be taken in combination with peginterferon alfa and
ribavirin. Ribavirin may cause birth defects or death of an unborn baby.
Therefore, a patient should not take INCIVEK combination treatment if she is
pregnant or may become pregnant, or if he is a man with a sexual partner who
is pregnant. Patients must use two forms of effective birth control during
treatment and for the 6 months after treatment with these medicines. Hormonal
forms of birth control, including birth control pills, vaginal rings, implants
or injections, may not work during treatment with INCIVEK.

INCIVEK and other medicines can affect each other and can also cause side
effects that can be serious or life threatening. There are certain medicines
patients cannot take with INCIVEK combination treatment. Patients should tell
their healthcare providers about all the medicines they take, including
prescription and non-prescription medicines, vitamins and herbal supplements.

INCIVEK can cause serious side effects including skin reactions, rash and
anemia that can be severe. The most common side effects of INCIVEK include
itching, nausea, diarrhea, vomiting, anal or rectal problems, taste changes
and tiredness. There are other possible side effects of INCIVEK, and side
effects associated with peginterferon alfa and ribavirin also apply to INCIVEK
combination treatment. Patients should tell their healthcare providers about
any side effect that bothers them or doesn't go away.

Please see full Prescribing Information for INCIVEK including the Medication
Guide, available at www.INCIVEK.com.

Special Note Regarding Forward-looking Statements

This press release contains forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995, including, without
limitation, Dr. Leiden's statements in the third and fourth paragraphs of the
press release, the information provided in the two paragraphs following the
statement "This section contains forward-looking guidance about the financial
outlook for Vertex Pharmaceuticals" and statements regarding (i) the
expectation that the pivotal program for ivacaftor and VX-809 will begin in
early 2013; (ii) the expectations regarding the timing and structure of
all-oral Phase 2 studies with VX-135; (iii) information regarding the
company's ongoing and planned studies, including studies to evaluate
ivacaftor, ivacaftor in combination with VX-809, VX-135, VX-509 and VX-787;
(iv) expectations regarding the availability of data from ongoing studies,
including Cohort 3 of the Phase 2 study of ivacaftor and VX-809, the ongoing
Phase 2 study of VX-661 and the ongoing Phase 2 study of VX-787, (v) Vertex’s
CF research program and (vi) the company's plans to submit data supporting a
twice-daily dosing regimen to the U.S. Food and Drug Administration in 2013
for potential inclusion in the telaprevir label in the U.S. While Vertex
believes the forward-looking statements contained in this press release are
accurate, there are a number of factors that could cause actual events or
results to differ materially from those indicated by such forward-looking
statements. Those risks and uncertainties include, among other things, that
the company's expectations regarding its 2012 INCIVEK net revenues and/or
operating expenses may be incorrect (including because one or more of the
company's assumptions underlying its revenue or expense expectations may not
be realized), that the outcomes of Vertex's ongoing and planned clinical
studies may not be favorable, that the initiation of planned studies may be
delayed or prevented, and other risks listed under Risk Factors in Vertex's
annual report and quarterly reports filed with the Securities and Exchange
Commission and available through the company's website at www.vrtx.com. Vertex
disclaims any obligation to update the information contained in this press
release as new information becomes available.

Conference Call Information

Vertex will host a conference call and webcast today, November 1, 2012 at 5:00
p.m. ET to review financial results and recent developments. The conference
call will be webcast live, and a link to the webcast may be accessed from the
‘Events' page of Vertex's website at www.vrtx.com.

To listen to the live call on the telephone, dial 1-866-501-1537 (United
States and Canada) or 1-720-545-0001 (International). To ensure a timely
connection, it is recommended that users register at least 15 minutes prior to
the scheduled webcast.

The conference ID number for the live call and replay is 38809529.

The call will be available for replay via telephone commencing November 1,
2012 at 8:00 p.m. ET running through 5:00 p.m. ET on November 15, 2012. The
replay phone number for the United States and Canada is 1-855-859-2056. The
international replay number is 1-404-537-3406.

Following the live webcast, an archived version will be available on Vertex's
website until 5:00 p.m. ET on November 8, 2012. Vertex is also providing a
podcast MP3 file available for download on the Vertex website at www.vrtx.com.

(VRTX-GEN)

Contact:

Vertex Pharmaceuticals Incorporated
Investors
Michael Partridge, 617-341-6108
or
Kelly Lewis, 617-961-7530
or
Media
Zachry Barber, 617-341-6470
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