— Product revenues of $2.20 billion, a 22%
increase compared to Q2 2021 —
— Company raises full year 2022 product revenue
guidance to $8.6 to $8.8 billion —
— Recent exa-cel and VX-880 clinical data
presentations demonstrate transformative potential for patients
with sickle cell disease, beta thalassemia and type 1 diabetes—
— Multiple clinical programs entering or
progressing through late-stage clinical development—
Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) today
reported consolidated financial results for the second quarter
ended June 30, 2022 and updated its full year 2022 financial
guidance.
“With sustained and growing leadership in CF, programs in five
disease areas now entering or progressing through late-stage
clinical development and the next wave of innovation beginning to
enter the clinic later this year, Vertex has reached a new
inflection point,” said Reshma Kewalramani, M.D., Chief Executive
Officer and President of Vertex. “As we reach more CF patients, we
are poised to deliver significant, durable financial returns for
years to come. In parallel, we are advancing a broad and deep
clinical pipeline of potentially transformative medicines across
multiple serious diseases, spanning small molecules, cell and
genetic therapies, and we expect this diversified portfolio of
medicines will serve many more patients and drive substantial
growth in the future.”
Second Quarter 2022 Financial
Highlights
Three Months Ended June
30,
%
2022
2021
Change
(in millions, except per share
amounts)
Product revenues, net
$
2,196
$
1,793
22
%
TRIKAFTA/KAFTRIO
$
1,893
$
1,256
SYMDEKO/SYMKEVI
$
43
$
134
ORKAMBI
$
122
$
221
KALYDECO
$
139
$
183
GAAP operating income (loss)
$
1,106
$
(38
)
Non-GAAP operating income *
$
1,187
$
71
GAAP net income
$
810
$
67
Non-GAAP net income *
$
930
$
43
GAAP net income per share -
diluted
$
3.13
$
0.26
Non-GAAP net income per share - diluted
*
$
3.60
$
0.17
*Starting in the first quarter of 2022,
Vertex no longer excludes research and development charges
resulting from upfront or contingent milestone payments in
connection with collaborations, asset acquisitions and/or licensing
of third-party intellectual property rights from its Non-GAAP
financial measures. Non-GAAP financial measures for the second
quarter of 2021 have been recast to reflect this change.
Product revenues increased 22% to $2.20 billion compared
to the second quarter of 2021, primarily driven by the strong
uptake of TRIKAFTA/KAFTRIO in multiple countries internationally
and continued strong performance of TRIKAFTA in the U.S., including
the June 2021 launch of TRIKAFTA in children 6-11 years old in the
U.S. Net product revenues in the second quarter of 2022 increased
13% to $1.42 billion in the U.S. and increased 46% to $781 million
outside the U.S., compared to the second quarter of 2021.
GAAP and Non-GAAP net income increased compared to the
second quarter of 2021, primarily due to strong product revenue
growth and a one-time $900 million payment in connection with the
amendment of Vertex's collaboration with CRISPR Therapeutics in the
second quarter of 2021. The payment to CRISPR is included in
acquired in-process research and development expenses ("Acquired
IPR&D") in the second quarter of 2021.
Cash, cash equivalents and marketable securities as of
June 30, 2022 were $9.3 billion, an increase of approximately $1.7
billion compared to December 31, 2021. The increase was primarily
driven by strong revenue growth and operating cash flow.
Second Quarter 2022
Expenses
Three Months Ended June
30,
2022
2021
(in millions)
Combined GAAP R&D, Acquired
IPR&D and SG&A expenses
$
877
$
1,602
Combined Non-GAAP R&D, Acquired
IPR&D and SG&A expenses *
$
750
$
1,496
GAAP R&D expenses
$
600
$
449
Non-GAAP R&D expenses *
$
515
$
383
Acquired IPR&D *
$
62
$
958
GAAP SG&A expenses
$
215
$
195
Non-GAAP SG&A expenses
$
173
$
154
GAAP income taxes (1)
$
214
$
(111
)
Non-GAAP income taxes *
$
259
$
11
GAAP effective tax rate (1)
21
%
251
%
Non-GAAP effective tax rate
22
%
20
%
*Starting in the first quarter of 2022,
Vertex no longer excludes research and development charges
resulting from upfront or contingent milestone payments in
connection with collaborations, asset acquisitions and/or licensing
of third-party intellectual property rights from its Non-GAAP
financial measures. These charges are included as "Acquired
in-process research and development expenses," and were previously
included in "Research and development expenses," in Vertex's
consolidated statements of operations. Non-GAAP financial measures
for the second quarter of 2021 have been recast to reflect this
change.
Combined GAAP and Non-GAAP R&D, Acquired IPR&D and
SG&A expenses decreased compared to the second quarter of
2021, primarily due to the one-time $900 million payment to CRISPR
in the second quarter of 2021, partially offset by increased
investment in support of multiple programs that have advanced in
mid- and late-stage clinical development and the costs to support
launches of Vertex's therapies globally.
GAAP and Non-GAAP income taxes increased compared to the
second quarter of 2021, primarily due to the income tax impact of
the $900 million payment to CRISPR in the second quarter of 2021.
GAAP income taxes also increased due to a discrete tax benefit
recorded in the second quarter of 2021. Please refer to Note 1 for
further details.
Full Year 2022 Financial
Guidance
Vertex is raising its full year 2022 product revenue guidance to
$8.6 to $8.8 billion. The increase primarily reflects the robust
uptake of KAFTRIO/TRIKAFTA in countries outside the U.S. where
Vertex has recently achieved reimbursement. Vertex is also
increasing full year 2022 combined GAAP and non-GAAP R&D,
Acquired IPR&D and SG&A expense guidance. The increase
results from the advancement of the company's clinical pipeline,
including a number of programs that have recently entered or are
initiating late-stage development, and from incremental expenses
related to recent business development activity.
Updated guidance is summarized below:
Current FY 2022
Previous FY 2022
Product revenues
$8.6 to $8.8 billion
$8.4 to $8.6 billion
Combined GAAP R&D, Acquired
IPR&D and SG&A expenses (2)
$3.48 to $3.63 billion
$3.30 to $3.45 billion
Combined Non-GAAP R&D, Acquired
IPR&D and SG&A expenses (2) *
$3.0 to $3.1 billion
$2.82 to $2.92 billion
Non-GAAP effective tax rate
Unchanged
21% to 22%
*Starting in the first quarter of 2022,
Vertex no longer excludes research and development charges
resulting from upfront or contingent milestone payments in
connection with collaborations, asset acquisitions and/or licensing
of third-party intellectual property rights from its Non-GAAP
financial measures. These charges are included as "Acquired
in-process research and development expenses," and were previously
included in "Research and development expenses," in Vertex's
consolidated statements of operations.
Key Business Highlights
Cystic Fibrosis (CF) Marketed
Products
Vertex anticipates the number of CF patients treated with its
medicines will continue to grow as a result of the uptake of
TRIKAFTA in the U.S. and the launches of KAFTRIO outside the U.S.,
additional reimbursement agreements outside the U.S., and new
approvals for the treatment of younger patients. Recent progress
includes:
- Vertex has completed the Phase 3 study of TRIKAFTA/KAFTRIO
(elexacaftor/tezacaftor/ivacaftor and ivacaftor) in children 2 to 5
years old. Data from this study showed similarly compelling
efficacy of TRIKAFTA/KAFTRIO in children 2 to 5 years old to other
age groups and no new safety findings. The Company expects to
present the results at a medical forum later in 2022. Vertex
anticipates submitting global regulatory filings for
TRIKAFTA/KAFTRIO in children 2 to 5 years old this year.
- At the European Cystic Fibrosis Society's (ECFS) European
Cystic Fibrosis Conference in June, Vertex presented data from the
U.S. CF Foundation Patient Registry (CFFPR) of more than 16,000
people treated with TRIKAFTA for an average of nine months, showing
that treatment with TRIKAFTA was associated with improved lung
function and reduced risk of pulmonary exacerbations compared to
pre-TRIKAFTA baseline, as well as lower risks of lung transplant
and death, compared to the historical 2019 U.S. CFFPR population.
Vertex also presented data for TRIKAFTA demonstrating no loss in
mean lung function in people with F/F and F/MF mutations over a
two-year period, in contrast to declines seen in the matched
controls.
- In April, Health Canada granted marketing authorization for
TRIKAFTA in children 6 to 11 years of age. With this approval,
approximately 500 children with CF became newly eligible for
treatment with a CFTR modulator. Vertex recently signed a Letter of
Intent (LOI) with the pan-Canadian Pharmaceutical Alliance (pCPA)
paving the way for reimbursement of TRIKAFTA for this age
group.
- Vertex has filed a Supplemental New Drug Application (sNDA)
with the U.S. Food and Drug Administration (FDA) and a Marketing
Authorization Application (MAA) with the European Medicines Agency
(EMA) for the use of ORKAMBI in children 12 months to less than 24
months old. The FDA has assigned a Prescription Drug User Fee Act
(PDUFA) target date of September 4, 2022.
TRIKAFTA/KAFTRIO is now approved and reimbursed or accessible in
more than 25 countries.
R&D pipeline
Vertex is delivering on a diversified pipeline of potentially
transformative small molecule, cell and genetic therapies aimed at
serious diseases. Recent and anticipated progress for key pipeline
programs is summarized below.
Cystic Fibrosis
Vertex continues to pursue next-in-class, small molecule CFTR
modulator therapies as well as new treatment options for the
approximately 5,000 patients who cannot benefit from CFTR
modulators.
- Vertex is conducting two Phase 3 global, randomized,
double-blind, active-controlled clinical trials (SKYLINE 102 and
SKYLINE 103) evaluating Vertex’s new once-daily investigational
triple combination of VX-121/tezacaftor/VX-561 in patients with CF
12 years of age and older. The SKYLINE 102 and SKYLINE 103 trials
will compare the efficacy and safety of VX-121/tezacaftor/VX-561 to
TRIKAFTA. More than 250 sites across both studies are active and
enrolling patients. Enrollment in both trials is expected to be
completed in late 2022 or early 2023.
- In parallel to SKYLINE 102 and 103, Vertex has also initiated a
study of VX-121/tezacaftor/VX-561 in children with CF 6 to 11 years
of age.
- In collaboration with Moderna, Vertex is developing CFTR mRNA
therapeutics designed to treat the underlying cause of CF by
programming cells in the lungs to produce functional CFTR protein
for the treatment of the approximately 5,000 people with CF who do
not produce any CFTR protein. IND-enabling studies have been
completed, and Vertex is on track to submit an IND for this program
in 2H 2022.
Beta Thalassemia and Sickle Cell Disease
The exa-cel (CTX001) program employs a non-viral ex vivo CRISPR
gene-editing therapy, which is being developed as a potential
functional cure for transfusion-dependent thalassemia (TDT) and
severe sickle cell disease (SCD). Vertex is developing exa-cel in
collaboration with CRISPR Therapeutics.
- In June, at the European Hematology Association (EHA) Congress,
Vertex and CRISPR presented data from 75 patients (44 with TDT, 31
with SCD) from the CLIMB-111, CLIMB-121 and CLIMB-131 studies with
follow-up ranging from 1.2 to 37.2 months after exa-cel infusion.
All 31 patients with severe SCD, characterized by recurrent
vaso-occlusive crises (VOCs), were free of VOCs after exa-cel
infusion through the duration of follow-up, with follow-up ranging
from 2.0 to 32.3 months. Of the 44 patients with TDT, 42 were
transfusion-free with follow-up ranging from 1.2 to 37.2 months.
Two patients who were not yet transfusion-free had 75% and 89%
reductions in transfusion volume, respectively. The safety profile
was generally consistent with myeloablative conditioning with
busulfan and autologous stem cell transplant.
- Two additional Phase 3 studies of exa-cel have been initiated
in pediatric patients, one in TDT and a second in SCD.
- Vertex has completed discussions with the EMA and the Medicines
and Healthcare products Regulatory Agency (MHRA) on the submission
package for exa-cel and is on track to submit for regulatory
approvals of exa-cel for SCD and TDT in Europe and the UK by the
end of 2022. Discussions with the U.S. FDA are ongoing.
APOL1-Mediated Kidney Disease (AMKD)
Vertex has discovered multiple oral, small molecule inhibitors
of APOL1, pioneering a new class of medicines that target an
underlying genetic driver of kidney disease.
- In March, Vertex initiated pivotal development of inaxaplin
(VX-147) in a single Phase 2/3 study in patients with two APOL1
mutations and proteinuric kidney disease.
- This Phase 2/3 adaptive study will first evaluate two doses of
inaxaplin to select a dose for Phase 3 and subsequently evaluate
the efficacy and safety of the single, selected dose in the Phase 3
portion of the study. The primary efficacy endpoint for the final
analysis is eGFR slope in patients receiving the selected dose of
inaxaplin compared to placebo at two years. The study is designed
to have a pre-planned interim analysis at Week 48 evaluating eGFR
slope, supported by a percent change from baseline in proteinuria
in the inaxaplin arm versus placebo. If positive, the interim
analysis may serve as the basis for Vertex to seek accelerated
approval of inaxaplin in the U.S. for patients with AMKD.
Enrollment is ongoing, with more than 30 sites active in the
U.S.
- The U.S. FDA recently granted inaxaplin Breakthrough Therapy
designation for APOL1-mediated focal segmental glomerulosclerosis
(FSGS) and the EMA has also granted inaxaplin Priority Medicines
(PRIME) designation for AMKD.
Pain (NaV1.8)
Vertex has discovered multiple selective small molecule
inhibitors of NaV1.8 with the objective of creating a new class of
pain medicines that have the potential to provide effective pain
relief, without the limitations of opioids and other
standard-of-care pain medicines.
- In March, Vertex reported positive data from two Phase 2
dose-ranging acute pain studies with VX-548, one following
bunionectomy surgery and the other following abdominoplasty
surgery. Both studies met their primary endpoint and established
proof of concept for VX-548.
- Vertex has completed its end-of-phase 2 meeting with the FDA
and has reached agreement on the design of the Phase 3 program in
acute pain. The Phase 3 program will include two randomized,
double-blind, placebo-controlled studies evaluating the efficacy
and safety of VX-548 for moderate to severe acute pain following
bunionectomy or abdominoplasty surgery. Each study will also
include a hydrocodone bitartrate/acetaminophen (HB/APAP) treatment
arm. A third single-arm study will evaluate treatment with VX-548
for up to 14 days in multiple other types of moderate to severe
acute pain. Vertex expects to initiate this program in the fourth
quarter of 2022.
- Vertex also intends to initiate a Phase 2 dose-ranging study of
VX-548 in neuropathic pain by the end of 2022.
- The U.S. FDA has granted VX-548 Breakthrough Therapy
designation for moderate to severe acute pain.
Type 1 Diabetes (T1D)
Vertex is evaluating cell therapies using stem cell-derived
islets to replace the endogenous insulin-producing islet cells that
are destroyed in people with T1D, with the goal of developing a
potential functional cure for this disease.
- VX-880 is a stem cell-derived, fully differentiated islet
replacement therapy, used in combination with standard
immunosuppression to protect the implanted cells. VX-880 is being
evaluated in a Phase 1/2 clinical trial for the treatment of
T1D.
- In June, at the American Diabetes Association (ADA) Scientific
Sessions Conference, Vertex provided additional data on the two
patients dosed at half the target dose in Part A of its VX-880
Phase 1/2 study. Vertex had previously reported that both patients
had achieved glucose-responsive insulin production, improvements in
glycemic control and reductions in exogenous insulin requirements.
Additional data presented at ADA also showed significant increases
in the blood glucose time-in-range compared to baseline, following
treatment with VX-880. Patient 1 showed a blood glucose
time-in-range increase from 40.1% at baseline to 99.9% at Day 270
and was insulin independent. Patient 2 showed a time-in-range
increase from 35.9% at baseline to 51.9% at Day 150 with a 30%
reduction in exogenous insulin use.
- The VX-880 Phase 1/2 clinical trial has resumed enrollment in
the U.S. Part B of the study is open for enrollment at sites in the
U.S. and Canada.
- Vertex is advancing additional programs in T1D, in which these
same stem cell-derived islets are encapsulated and implanted in an
immunoprotective device or modified to produce hypoimmune stem cell
islets, with the goal of eliminating the need for
immunosuppression.
- Vertex is on track to submit an IND for the cells plus device
program in 2022.
Alpha-1 Antitrypsin (AAT) Deficiency
Vertex is working to address the underlying genetic cause of
alpha-1 antitrypsin (AAT) deficiency by developing novel small
molecule correctors of Z-AAT protein folding, with the goal of
increasing the secretion of functional AAT into the blood and
addressing both the lung and the liver aspects of AAT
deficiency.
- Vertex is on track to advance one or more novel small molecule
Z-AAT correctors into the clinic in 2022.
Duchenne Muscular Dystrophy (DMD)
Vertex is investigating a novel approach to treating DMD by
delivering CRISPR/Cas9 gene-editing technology to muscle cells,
with the goal of restoring near-full length dystrophin protein
expression by targeting specific mutations in the dystrophin gene
that cause the disease.
- IND-enabling studies for the first in vivo gene editing therapy
for DMD are underway. Vertex anticipates submitting an IND in
2023.
Consistent with its overall strategy, Vertex takes a portfolio
approach to all of its programs, with additional assets in CF, SCD,
Beta Thalassemia, AMKD, T1D, Pain, and AATD in earlier stages of
development.
Investments in External
Innovation
Consistent with its strategy to develop transformative medicines
for serious diseases, Vertex recently entered into the following
transactions:
- In July, Vertex entered into a definitive agreement to acquire
ViaCyte, a privately held company focused on delivering novel stem
cell-derived cell replacement therapies as a functional cure for
type 1 diabetes, for $320 million in cash. The acquisition will
provide Vertex with complementary assets, capabilities and
technologies that could accelerate Vertex's existing T1D programs.
Vertex anticipates the acquisition will close later this year.
- Also in July, Vertex entered into a research collaboration with
Verve Therapeutics, focused on discovering and developing an in
vivo gene editing program for a liver disease.
- In May, Vertex acquired Catalyst Biosciences' complement
portfolio and related intellectual property for $60 million in
cash, adding capabilities in the area of complement-mediated
diseases.
Non-GAAP Financial
Measures
In this press release, Vertex's financial results and financial
guidance are provided in accordance with accounting principles
generally accepted in the United States (GAAP) and using certain
non-GAAP financial measures. In particular, non-GAAP financial
results and guidance exclude from Vertex's pre-tax income (i)
stock-based compensation expense, (ii) gains or losses related to
the fair value of the company's strategic investments, (iii)
increases or decreases in the fair value of contingent
consideration, (iv) acquisition-related costs, (v) an intangible
asset impairment charge and (vi) other adjustments. The company's
non-GAAP financial results also exclude from its provision for
income taxes the estimated tax impact related to its non-GAAP
adjustments to pre-tax income described above and certain discrete
items. These results should not be viewed as a substitute for the
company’s GAAP results and are provided as a complement to results
provided in accordance with GAAP. 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
the company's financial position that the company believes is
helpful to an understanding of its ongoing business. Management
also 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. The company’s calculation of non-GAAP financial
measures likely differs from the calculations used by other
companies. A reconciliation of the GAAP financial results to
non-GAAP financial results is included in the attached financial
information.
The company provides guidance regarding combined R&D,
Acquired IPR&D and SG&A expenses and effective tax rate on
a non-GAAP basis. The guidance regarding combined GAAP and non-GAAP
R&D, Acquired IPR&D and SG&A expenses does not include
estimates associated with any potential future business development
transactions, including collaborations, asset acquisitions and/or
licensing of third-party intellectual property rights. The company
does not provide guidance regarding its GAAP effective tax rate
because it is unable to forecast with reasonable certainty the
impact of excess tax benefits related to stock-based compensation
and the possibility of certain discrete items, which could be
material.
Vertex Pharmaceuticals Incorporated
Consolidated Statements of Operations (in millions, except
per share amounts) (unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Revenues:
Product revenues, net
$
2,196.2
$
1,793.4
$
4,293.7
$
3,516.7
Other revenues
—
—
—
1.0
Total revenues
2,196.2
1,793.4
4,293.7
3,517.7
Costs and expenses:
Cost of sales
261.8
228.0
507.6
420.3
Research and development expenses
600.1
448.7
1,201.2
903.0
Acquired in-process research and
development expenses (3)
61.9
958.4
63.9
960.1
Selling, general and administrative
expenses
215.3
194.6
430.5
386.7
Change in fair value of contingent
consideration
(49.2
)
1.6
(56.7
)
(2.3
)
Total costs and expenses
1,089.9
1,831.3
2,146.5
2,667.8
Income (loss) from operations
1,106.3
(37.9
)
2,147.2
849.9
Interest income
10.8
1.1
12.4
2.6
Interest expense
(14.6
)
(15.5
)
(29.5
)
(31.2
)
Other (expense) income, net
(78.1
)
8.1
(150.9
)
(44.6
)
Income (loss) before provision for
(benefit from) income taxes
1,024.4
(44.2
)
1,979.2
776.7
Provision for (benefit from) income
taxes
213.9
(111.2
)
406.6
56.6
Net income
$
810.5
$
67.0
$
1,572.6
$
720.1
Net income per common share:
Basic
$
3.17
$
0.26
$
6.15
$
2.78
Diluted
$
3.13
$
0.26
$
6.09
$
2.75
Shares used in per share calculations:
Basic
255.9
259.0
255.5
259.2
Diluted
258.7
261.0
258.3
261.5
Vertex Pharmaceuticals Incorporated
Reconciliation of GAAP to Non-GAAP Net Income and Operating
Income (in millions, except per share amounts) (unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
GAAP net income
$
810.5
$
67.0
$
1,572.6
$
720.1
Stock-based compensation expense
113.9
104.6
244.2
219.8
Decrease (increase) in fair value of
strategic investments (4)
84.2
(10.6
)
159.8
41.7
(Decrease) increase in fair value of
contingent consideration (5)
(49.2
)
1.6
(56.7
)
(2.3
)
Intangible asset impairment charge (5)
13.0
—
13.0
—
Acquisition-related costs (6)
2.8
2.8
5.6
5.6
Total non-GAAP adjustments to pre-tax
income *
164.7
98.4
365.9
264.8
Tax adjustments (1) *
(44.7
)
(122.1
)
(100.9
)
(160.3
)
Non-GAAP net income *
$
930.5
$
43.3
$
1,837.6
$
824.6
Net income per diluted common share:
GAAP
$
3.13
$
0.26
$
6.09
$
2.75
Non-GAAP *
$
3.60
$
0.17
$
7.11
$
3.15
Shares used in diluted per share
calculations:
GAAP and Non-GAAP
258.7
261.0
258.3
261.5
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
GAAP operating income (loss)
$
1,106.3
$
(37.9
)
$
2,147.2
$
849.9
Stock-based compensation expense
113.9
104.6
244.2
219.8
(Decrease) increase in fair value of
contingent consideration (5)
(49.2
)
1.6
(56.7
)
(2.3
)
Intangible asset impairment charge (5)
13.0
—
13.0
—
Acquisition-related costs (6)
2.8
2.8
5.6
5.6
Non-GAAP operating income *
$
1,186.8
$
71.1
$
2,353.3
$
1,073.0
Vertex Pharmaceuticals Incorporated
Reconciliation of GAAP to Non-GAAP Expenses (in millions,
except percentages) (unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
GAAP cost of sales
$
261.8
$
228.0
$
507.6
$
420.3
Stock-based compensation expense
(2.4
)
(1.6
)
(4.6
)
(3.0
)
Non-GAAP cost of sales
$
259.4
$
226.4
$
503.0
$
417.3
GAAP research and development
expenses
$
600.1
$
448.7
$
1,201.2
$
903.0
Stock-based compensation expense
(69.5
)
(62.6
)
(149.9
)
(135.4
)
Intangible asset impairment charge (5)
(13.0
)
—
(13.0
)
—
Acquisition-related costs (6)
(2.8
)
(2.8
)
(5.6
)
(5.6
)
Non-GAAP research and development
expenses *
$
514.8
$
383.3
$
1,032.7
$
762.0
Acquired in-process research and
development expenses *
$
61.9
$
958.4
$
63.9
$
960.1
GAAP selling, general and
administrative expenses
$
215.3
$
194.6
$
430.5
$
386.7
Stock-based compensation expense
(42.0
)
(40.4
)
(89.7
)
(81.4
)
Non-GAAP selling, general and
administrative expenses
$
173.3
$
154.2
$
340.8
$
305.3
Combined non-GAAP R&D, Acquired
IPR&D and SG&A expenses *
$
750.0
$
1,495.9
$
1,437.4
$
2,027.4
GAAP other (expense) income,
net
$
(78.1
)
$
8.1
$
(150.9
)
$
(44.6
)
Decrease (increase) in fair value of
strategic investments (4)
84.2
(10.6
)
159.8
41.7
Non-GAAP other income (expense),
net
$
6.1
$
(2.5
)
$
8.9
$
(2.9
)
GAAP provision for (benefit from)
income taxes
$
213.9
$
(111.2
)
$
406.6
$
56.6
Tax adjustments (1) *
44.7
122.1
100.9
160.3
Non-GAAP provision for income taxes
*
$
258.6
$
10.9
$
507.5
$
216.9
GAAP effective tax rate
21
%
251
%
21
%
7
%
Non-GAAP effective tax rate
22
%
20
%
22
%
21
%
*Starting in the first quarter of 2022,
Vertex no longer excludes research and development charges
resulting from upfront or contingent milestone payments in
connection with collaborations, asset acquisitions and/or licensing
of third-party intellectual property rights from its Non-GAAP
financial measures. These charges are included as "Acquired
in-process research and development expenses," and were previously
included in "Research and development expenses," in Vertex's
consolidated statements of operations. Non-GAAP financial measures
for the three and six months ended June 30, 2021 have been recast
to reflect this change.
Vertex Pharmaceuticals Incorporated
Condensed Consolidated Balance Sheets (in millions)
(unaudited)
June 30, 2022
December 31, 2021
Assets
Cash, cash equivalents and marketable
securities
$
9,253.4
$
7,524.9
Accounts receivable, net
1,332.9
1,136.8
Inventories
367.7
353.1
Property and equipment, net
1,100.1
1,094.1
Goodwill and intangible assets
1,389.2
1,402.2
Deferred tax assets
1,143.8
934.5
Other assets
995.1
986.9
Total assets
$
15,582.2
$
13,432.5
Liabilities and Shareholders'
Equity
Accounts payable and accrued expenses
$
2,317.5
$
1,873.6
Finance lease liabilities
531.6
556.7
Contingent consideration
129.8
186.5
Other liabilities
669.8
715.7
Shareholders' equity
11,933.5
10,100.0
Total liabilities and shareholders'
equity
$
15,582.2
$
13,432.5
Common shares outstanding
256.0
254.5
Notes and Explanations
1: In the three and six months ended June 30, 2022 and
2021, "Tax adjustments" included the estimated income taxes related
to non-GAAP adjustments to the company's pre-tax income (loss) and
excess tax benefits related to stock-based compensation. "Tax
adjustments" in the three and six months ended June 30, 2021 also
included a $100 million discrete tax benefit related to an increase
in the U.K.'s corporate tax rate from 19% to 25%, which was enacted
in June 2021 and will become effective in April 2023.
2: The difference between the company’s full year 2022
combined GAAP R&D, Acquired IPR&D and SG&A expenses and
combined non-GAAP R&D, Acquired IPR&D and SG&A expenses
guidance relates primarily to $445 million to $500 million of
stock-based compensation expense. The guidance regarding combined
GAAP and non-GAAP R&D, Acquired IPR&D and SG&A expenses
does not include estimates associated with any potential future
business development transactions, including collaborations, asset
acquisitions and/or licensing of third-party intellectual property
rights.
3: Vertex classifies upfront, contingent milestone, and
other payments pursuant to its business development transactions,
including collaborations, licenses of third-party technologies, and
asset acquisitions as “Acquired in-process research and development
expenses” in its consolidated statements of operations. These
amounts were previously classified as "Research and development
expenses." To conform prior periods to current presentation, the
company reclassified $958 million and $960 million from “Research
and development expenses” to “Acquired in-process research and
development expenses” for the three and six months ended June 30,
2021, respectively. In the three and six months ended June 30,
2021, "Acquired in-process research and development expenses"
primarily related to the $900 million upfront payment to
CRISPR.
4: "Other (expense) income, net" includes net gains and
losses related to changes in the fair value of the company's
strategic investments.
5: In June 2022, the company revised the scope of certain
acquired programs, resulting in a $13 million “Intangible asset
impairment charge” and a decrease in the associated fair value of
contingent consideration.
6: "Acquisition-related costs" in the three and six
months ended June 30, 2022 and 2021 related to costs associated
with the company's acquisition of Exonics.
Note:
Amounts may not foot due to rounding.
About Vertex
Vertex is a global biotechnology company that invests in
scientific innovation to create transformative medicines for people
with serious diseases. The company has multiple approved medicines
that treat the underlying cause of cystic fibrosis (CF) — a rare,
life-threatening genetic disease — and has several ongoing clinical
and research programs in CF. Beyond CF, Vertex has a robust
pipeline of investigational small molecule, cell and genetic
therapies in other serious diseases where it has deep insight into
causal human biology, including sickle cell disease, beta
thalassemia, APOL1-mediated kidney disease, pain, type 1 diabetes,
alpha-1 antitrypsin deficiency and Duchenne muscular dystrophy.
Founded in 1989 in Cambridge, Mass., Vertex's global
headquarters is now located in Boston's Innovation District and its
international headquarters is in London. Additionally, the company
has research and development sites and commercial offices in North
America, Europe, Australia and Latin America. Vertex is
consistently recognized as one of the industry's top places to
work, including 12 consecutive years on Science magazine's Top
Employers list and one of the 2021 Seramount (formerly Working
Mother Media) 100 Best Companies. For company updates and to learn
more about Vertex's history of innovation, visit www.vrtx.com or
follow us on Facebook, Twitter, LinkedIn, YouTube and
Instagram.
Special Note Regarding Forward-Looking Statements
This press release contains forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995, as
amended, including, without limitation, Dr. Kewalramani's
statements in this press release, the information provided
regarding future financial performance and operations, the section
captioned "Full Year 2022 Financial Guidance" and statements
regarding (i) anticipated regulatory discussions and filings, data
availability, and timing thereof, (ii) the expectations,
development plans and anticipated timelines for the company's
products and product candidates and pipeline programs, including
study designs, patient enrollment, data availability and timing
thereof, (iii) expectations for continued growth in the number of
CF patients treated with our medicines, including the number of
children newly eligible for TRIKAFTA, uptake of and expanded access
to the company’s medicines, additional reimbursement agreements,
new approvals, including market authorizations and label extensions
outside of the U.S., and expansion of treatment options for the
patients who cannot benefit from CFTR modulators alone, (iv)
expectations regarding our collaboration with Moderna to develop CF
mRNA therapeutics, including our plans to submit an IND for this
program in 2022, (v) expectations regarding two additional Phase 3
studies of exa-cel in pediatric patients and anticipated regulatory
filings for exa-cel, (vi) our plans regarding our Phase 2/3 study
of inaxaplin in AMKD, and our beliefs regarding anticipated results
of the study and the possibility for accelerated approval in the
U.S. and Europe, (vii) expectations regarding the potential
benefits of our pain program and products, and plans for the
advancement of VX-548 into a Phase 3 program in acute pain in the
second half of 2022 and to initiate a Phase 2 study in neuropathic
pain by the end of 2022, and the possibility for accelerated
approval in the U.S., (viii) the potential benefits and safety of
VX-880, and our plans to continue to progress the Phase 1/2 program
for VX-880, (ix) our plans and expectations regarding our
additional programs in T1D, including the completion of
IND-enabling studies for the encapsulated islet cell program and
anticipated regulatory filings in 2022, (x) plans to advance one or
more novel small molecule Z-AAT correctors into the clinic in 2022,
(xi) our plans regarding our DMD program, and (xii) our investments
and expectations in external innovation, including collaborations
and acquisitions. While Vertex believes the forward-looking
statements contained in this press release are accurate, these
forward-looking statements represent the company's beliefs only as
of the date of this press release and there are a number of risks
and uncertainties that could cause actual events or results to
differ materially from those expressed or implied by such
forward-looking statements. Those risks and uncertainties include,
among other things, that the company's expectations regarding its
2022 product revenues, expenses and effective tax rates may be
incorrect (including because one or more of the company's
assumptions underlying its expectations may not be realized), that
the company may not be able to submit the anticipated regulatory
filings on the expected timeline, or at all, that external factors
may have different or more significant impacts on the company's
business or operations than the company currently expects, that
data from preclinical testing or clinical trials, especially if
based on a limited number of patients, may not be indicative of
final results or available on anticipated timelines, that the
company may not realize the anticipated benefits from our
collaborations with third parties, that data from the company's
development programs may not support registration or further
development of its potential medicines in a timely manner, or at
all, due to safety, efficacy or other reasons, and other risks
listed under the heading “Risk Factors” in Vertex's annual report
and subsequent quarterly reports filed with the Securities and
Exchange Commission (SEC) and available through the company's
website at www.vrtx.com and on the SEC’s website at www.sec.gov.
You should not place undue reliance on these statements, or the
scientific data presented. Vertex disclaims any obligation to
update the information contained in this press release as new
information becomes available.
Conference Call and
Webcast
The company will host a conference call and webcast at 4:30 p.m.
ET. To access the call, please dial (877) 270-2148 (U.S.) or +1
(412) 902-6510 (International) and reference the “Vertex
Pharmaceuticals Second Quarter 2022 Earnings Call”.
The conference call will be webcast live and a link to the
webcast can be accessed through Vertex's website at www.vrtx.com in
the "Investors" section. To ensure a timely connection, it is
recommended that participants register at least 15 minutes prior to
the scheduled webcast. An archived webcast will be available on the
company's website.
(VRTX-E)
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version on businesswire.com: https://www.businesswire.com/news/home/20220804005875/en/
Vertex:
Investors: Manisha Pai, 617-961-1899 or Miroslava
Minkova, 617-341-6135
Media: 617-341-6992 mediainfo@vrtx.com
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