CAMBRIDGE, Mass. (TheStreet) -- Facing up the reality of plunging demand for its hepatitis C drug Incivek, Vertex Pharmaceuticals (VRTX) announced the firing of 15% of its global workforce to focus the company on its still-growing cystic fibrosis drug business.
Vertex admitted Tuesday that the number of hepatitis C patients being treated with Incivek has fallen rapidly now that a next generation of more effective medicines are on the cusp of approval, most notably Gilead Sciences' GILD sofosbuvir, which should receive FDA approval in December.
Incivek sales in the third quarter totaled $86 million, well below Street consensus of $124 million. Incivek was approved in May 2011 and became one of the fastest selling new drugs of all time, with quarterly sales exceeding $400 million. But the hepatitis C drug's fall was just as rapid as doctors advised patients to hold off treatment in anticipation of new and more effective medicines.
Vertex will now shift most of its efforts to growing its cystic fibrosis drug business, including its approved medicine Kalydeco and the clinical development of new drugs.
Kalydeco sales in the third quarter totaled $101 million, more than double from the year-ago quarter.Vertex expects to announce results from phase III studies of Kalydeco and the still-experimental drug VX-809 in the middle of 2014. These studies are hugely important for Vertex because the Kalydeco/VX-809 combination has the potential to vastly expand the number of cystic fibrosis patients treated. The job cuts announced Tuesday are expected to reduce 2014 operating expenses by $150-200 million compared to anticipated 2013 operating expenses of $1.1 billion, Vertex said. The company expects to end 2013 with $1.3 billion in cash. In the third quarter and on a GAAP basis, Vertex lost $128.7 million, or 54 cents per share, on total revenue of $221.7 million. That compares to a net loss of $26.5 million, or 27 cents per share, on total revenue of $336 million, in the year-ago quarter. Vertex updated 2013 financial guidance and now expects lower total revenue in the range of $1 billion to $1.05 billion. Current Street consensus pegs Vertex revenue at $1.17 billion for the year. Kalydeco sales in 2013 are now expected to reach $360 million to $365 million, in line with current consensus of $362 million. While Vertex is downshifting away from Incivek, the company continues to develop new hepatitis C drugs. Vertex also plans to outlicense its JAK inhibitor VX-509 which is being developed as a treatment for rheumatoid arthritis.
Vertex shares were down 2% to $76 in early trading.
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