AP News

Vertex sinks as Incivek sales decline further


NEW YORK (AP) — Shares of Vertex Pharmaceuticals Inc. slumped Friday after the company said sales of its hepatitis C pill Incivek continued to decline in the third quarter.

THE SPARK: Vertex reported its third-quarter results after the markets closed on Thursday. They fell far short of Wall Street expectations, as Vertex said it lost $57.5 million, or 27 cents per share. Excluding a variety of one-time costs, the company said net income totaled 13 cents per share. Revenue fell 49 percent, to $336 million.

Analysts expected net income of 20 cents per share and revenue of $375.7 million, according to FactSet.

Vertex reported $254 million in U.S. sales of Incivek and $49 million in sales of its cystic fibrosis drug Kalydeco. It also reported $20 million in royalty payments from European sales of Incivek by its partner Johnson & Johnson.

A year ago the company received a $200 million payment after European Union regulators approved Incivek and Johnson & Johnson began selling the drug.

THE BIG PICTURE: The Food and Drug Administration approved Incivek in May 2011, making it one of the first new hepatitis C drugs to reach the market in decades. Analysts expected annual sales of the pill to be in the billions of dollars. However revenue has stalled, partly because research into hepatitis C drugs has accelerated so quickly that patients are holding off on starting treatment as they wait for newer products to be approved.

Incivek is approved in combination with two standard drugs: ribavirin, which is a pill, and Interferon, which is given by injection. Several companies are studying hepatitis C regimens that don't include Interferon. Interferon has been a staple of hepatitis C therapy for years, but it can cause flu-like symptoms that last for months.

Compared to a year ago, Incivek sales dropped 39 percent. Quarterly sales peaked at $456.8 million in the fourth quarter of 2011, and then declined to $356.9 million in the first quarter of 2012, $327.7 million in the second quarter and $254.3 million in the latest quarter.

In July the Cambridge, Mass., company lowered its annual revenue forecast for Incivek to a range of $1.1 billion to $1.25 billion from $1.5 billion to $1.7 billion. Vertex maintained that forecast on Wednesday. That estimate suggests the company expects fourth-quarter sales will be anywhere from $161.1 million to $311.1 million.

THE ANALYSIS: Cowen & Co. analyst Phil Nadeau said sales of Incivek and Kalydeco were both well below Wall Street estimates, as analysts expected about $267 million in Incivek revenue and $57 million from Kalydeco. Nadeau said Vertex will need to successfully develop an all-oral hepatitis C regimen to stay competitive.

SHARE ACTION: Shares of Vertex lost $5.47, or 10.8 percent, to close at $45.01. The stock is down 24.3 percent since Oct. 5.


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