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Vertex's Hep C Drug Needs A Growth Injection

CAMBRIDGE, Mass. ( TheStreet) -- Flattening prescription growth for Vertex Pharmaceuticals (VRTX - Get Report) hepatitis C drug Incivek is causing investors some stress.

I told you last week that Incivek's growth rate was a burning question as we head into third-quarter earnings season. Sure enough, total Incivek scripts for the week ending Sept. 30 were down 2.8% week over week, according to IMS Health. This continues a trend of flat prescription growth that began in August. This chart of total scripts for the past five months tells the tale and explains why Vertex shares shed 9% Monday.

The upper line tracks Incivek total scripts, illustrating quite clearly just how fast the new Hep C drug took off. That's pretty much the definition of a rocket-type drug launch. But all rockets come back to Earth eventually, some sooner than others, so the flattening of the Incivek scrip curve starting in August is what's on the mind of investors these days.

By the way, the bottom line on the charts tracks prescriptions of Merck's (MRK - Get Report) Hep C drug Victrelis. Notice the narrowing gap between the two lines beginning this summer. Incivek's total market share was 75% or the week ending Sept. 30 compared to 25% for Victrelis, according to IMS. The gap is still wide but it has narrowed from earlier this spring when Incivek's market share was closer to 80%.

Vertex reports third-quarter earnings on Oct. 27. Analysts have Vertex earning 18 cents per share in the third quarter on an adjusted basis, according to Bloomberg.

As for the all-important Incivek, Bloomberg data pegs third-quarter sales consensus at $267 million but that appears to be quite low based on current prescription trends, even with the flattening growth. The Street's whisper number for Incivek sales is closer to $400 million. [Incivek sales in the second quarter totaled $75 million.]

Vertex has to put up a strong Incivek sales number for the third quarter, but even if they meet or beat consensus by a small margin, investors are going to be asking hard questions about Incivek growth trends moving forward.

The initial Incivek launch was phenomenal, but from where is the next leg of growth going to come?
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