Vertex profits on one-time gain despite plummeting Incivek sales

Hepatitis C drugs like Vertex's ($VRTX) Incivek are quickly becoming a thing of the past. A new generation of easier-to-tolerate, interferon-free treatments like Gilead's ($GILD) Sovaldi is moving in, and Vertex's fourth-quarter revenues showed it. But a hefty one-time royalty payment helped the company turn a profit, even despite plummeting sales of Incivek--one of just two drugs it currently has on the market.

The Cambridge, MA-based drugmaker swung to a profit of $44.3 million, or $0.19 per share, up from a loss of $76.1 million, or $0.35, in the year-ago quarter, thanks in large part to a $152 million royalty payout from Johnson & Johnson's ($JNJ) Janssen subsidiary for future overseas rights to the hep C drug. That drove revenue up 5% for the quarter despite a 91% drop in Incivek's U.S. sales; the fastest drug to ever reach the $1 billion sales benchmark, it turned in a mere $19.3 million in domestic revenue this quarter.

But the company's real focus is cystic fibrosis, and its med for the G551D mutation, Kalydeco, netted an 87.2% increase to $109.5 million. Uptake in Europe, which followed reimbursement discussions there, powered the increase.

Vertex CEO Jeffrey Leiden

"We're now reaching nearly all of the eligible G551D patients ages 6 and older in both the U.S. and Europe," CEO Jeffrey Leiden said on a Wednesday call with investors.

But that means Vertex will have to broaden Kalydeco's label and geographic reach if it wants to broaden its sales, and the company is hard at work on both of those objectives. The company is in public reimbursement negotiations with both Australia and Canada, home to approximately 200 and 100 eligible G551D patients, respectively. And last fall, it submitted a Supplemental New Drug Application to the FDA for approval in CF patients with at least one non-G551D gating mutation, a group comprising about 350 people in the U.S. and EU; the FDA should make a decision on that by March 27.

When all is said and done, Vertex expects revenue between $570 million and $600 million for 2014, with Kalydeco chipping in $470 million to $500 million of that haul.

"We expect these drivers to enable us to grow our Kalydeco revenue beginning in the second quarter and continuing throughout the year," Chief Commercial Officer and EVP Stuart Arbuckle said on the call. "Our goal, as always, is to enable patients who can benefit from Kalydeco to access the medicine as fast as possible."

- read the release

Special Reports: Top 15 Drug Launch Superstars - Kalydeco - Vertex Pharmaceuticals | Top 20 orphan drugs by 2018 - Kalydeco

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