) --

Vertex Pharmaceuticals'

(VRTX) - Get Report

fourth-quarter earnings report Thursday may represent the high-water sales mark for the hepatitis C drug Incivek -- with prescriptions already declining just seven months after launch.

Current consensus estimate for fourth-quarter 2011 Incivek sales is $483 million, down from more than $500 million earlier this month.

If Vertex meets lowered sales expectations, Incivek will still deliver its best-ever quarter. After that, Incivek sales in the current quarter and through the rest of 2012 are expected to flatten out, perhaps fall, as doctors slow their use of the drug. Hepatitis C patients who can afford to delay treatment may wait for the arrival of new, all-oral regimens expected in 2013-2014.

Before anyone throws a pity party for Vertex, some perspective is in order. Incivek, even with flat prescriptions and sales, is still a cash-generating machine for Vertex. The drug is on pace to record close to $1 billion in sales in 2011 -- amazing since it was only approved on May 23.

In 2012, Incivek will deliver sales around $2 billion, according to the most current consensus estimate.

Vertex has not yet provided 2012 sales guidance but may do so on Thursday. The only reason that's bad is because many investors on Wall Street tend to value quarter-over-quarter sales growth over everything else. An Incivek year with flattish sequential revenue, even if that revenue totals $2 billion, just doesn't ring the bell for many institutional investors.

Vertex shares at $34.74 are up 5% since the start of the year but are down 40% from their peak right before Incivek was approved last May. That's investors baking in Incivek's relatively short revenue stream. The worst is expected so if Incivek outperforms lowered forecasts or if competing next-generation Hep C drugs from

Gilead Sciences

(GILD) - Get Report


Bristol-Myers Squibb

(BMY) - Get Report

falter, Vertex could very easily rebound in a big way.

Vertex is not ceding the race to develop an all-oral Hep C regimen to its rivals. Later this quarter, Vertex will announce early cure rates from a phase II study of triple therapy that combines Incivek, the experimental pill VX-222 and ribavirin. In the second quarter, the company will release the first proof-of-concept data on two Hep C "nucs" licensed from

Alios Biopharma


The FDA is expected to issue an approval decision on Vertex's lead cystic fibrosis drug Kalydeco on April 18. Top-line results from a study which combines Kalydeco with another experimental cystic fibrosis drug in the company's pipeline is expected mid year.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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