What a difference two years can make. Once riding high on its groundbreaking hepatitis C treatment Incivek, Vertex Pharmaceuticals ($VRTX) is now cutting 370 jobs to pivot away from the lagging drug and concentrate on its burgeoning cystic fibrosis franchise.
What happened? A new wave of hepatitis C treatments, led by Gilead Sciences' ($GILD) sofosbuvir. Heartily backed by an FDA advisory panel Friday, sofosbuvir is first in a class of treatments aimed at shortening hep C treatment, boosting its effectiveness and easing its notorious side effects. The coming all-oral drug cocktails will shut out interferon--and shunt Incivek aside.
The Vertex drug, known generically as telaprevir, has already suffered from these as-yet-unlaunched drugs, under development by Gilead, Bristol-Myers Squibb ($BMY), AbbVie ($ABBV) and Johnson & Johnson ($JNJ). Doctors have been leaving patients untreated to wait for the new treatments to arrive. Sales were down a whopping 66% for the third quarter, to $85.6 million. And that's where Vertex's cost cuts come in.
"As new medicines for hepatitis C near approval, fewer people are starting treatment with Incivek, and as a result, we are reducing our workforce supporting this medicine," CEO Jeffrey Leiden said in a statement. "Today is a difficult day for everyone at Vertex, but these changes are necessary as we work to develop new breakthrough medicines in the coming years."
The cuts amount to about 15% of Vertex's global workforce, with 175 positions on the block in its home base of Massachusetts. Much of the pain will come in sales; Vertex built up a sizable force to promote Incivek because it had expected the drug to be a solid performer for several years, Leiden told The Boston Globe. The company expects to save up to $200 million in operating expenses next year. The savings will be welcome: Vertex reported a bigger loss this quarter compared with last year, at $124.1 million versus $57.5 million.
The bright spot at Vertex is Kalydeco (ivacaftor), a cystic fibrosis treatment that's caught on fast. Launched last year, the drug delivered $171 million in sales for 2012, and it's poised for a big increase this year. Third-quarter sales amounted to $101 million, bringing the year's total so far to $261 million. And that's where Vertex's future lies, Leiden figures--in CF and other areas.
- read the release from Vertex
- get more from the Globe
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