Last week, Vertex Pharmaceuticals (VRTX) lowered its 2009 revenue guidance. The company expects its net loss for the full year to increase to $650 million compared with an earlier prediction of $515 million to $550 million.
The increased losses are due to the company’s decision to retain its pipeline candidate, VX-509, for the treatment of rheumatoid arthritis for phase II clinical development and an estimated $115 million incurred for restructuring, acquisition, stock-based compensation costs and a loss on exchange of convertible subordinated notes.
The phase II trial of VX-509 will be conducted over a 12-week period enrolling 200 patients with moderate to severe rheumatoid arthritis. The trial is set to begin in the first quarter of 2010 with interim data being available by the middle of next year. Vertex is seeking collaborative opportunities with major pharmaceutical companies for the drug.
Vertex expects to receive $120 million in cash from the issuance of $155 million in notes secured by future milestone payments for telaprevir, the company’s candidate to treat hepatitis C. The company expects to mop up another $35 million from the sale of up to $95 million of rights to potential future milestone payments that Vertex is eligible to receive from the launch of the drug in Europe.
Vertex is also eligible to receive $105 million from Mitsubishi Tanabe Pharma Corp. related to an amended agreement for the development and commercialization of telaprevir in Japan and certain Far East countries. Following the expected addition of $260 million of cash arising out of the issuance of notes and other agreements, Vertex raised its full year guidance for cash, cash equivalents and marketable securities from approximately $700 million to approximately $800 million.
Telaprevir is being developed under a collaboration agreement with Johnson & Johnson (JNJ), under which Vertex received an upfront milestone payment of $165 million. Approximately 50% of the development costs are being reimbursed by Johnson & Johnson. Upon commercialization, Vertex will receive a mid-20% royalty on sales of telaprevir in Johnson & Johnson’s licensed regions including Europe, while Vertex will retain exclusive rights in the US. The company expects to file a New Drug Application for the drug in the second half of 2010.
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