Vertex Makes CEO Change Amidst Efforts to Diversify Beyond Hepatitis C

CAMBRIDGE, Mass. ( TheStreet) -- Vertex Pharmaceuticals ( VRTX) CEO Matt Emmens is stepping down in February, just three years after taking the post at the biopharmaceutical firm known best for its recently launched hepatitis C drug Incivek.

Jeff Leiden, a former Abbott ( ABT) top executive and current Vertex board member, will take over as Vertex's CEO, the company said in a statement Thursday.

Vertex's CEO swap comes as questions swirl around the company’s future. Incivek was one of the most successful new drug launches in history and helped Vertex reach profitability for the first time. But Incivek's long-term commercial potential is now threatened by newer, more potent hepatitis C therapies working their way towards the market. Most prominently, these new hepatitis C drugs include those Gilead Sciences ( GILD) just acquired by paying $11 billion for Pharmasset ( VRUS).

As a result, Vertex's stock price, which reached $58 last May right before Incivek was approved, has sunk to around $30 and is down about 14% this year. Vertex is trying to change investor perceptions of the company as one that is solely focused on hepatitis C. Important to this effort to help Vertex diversify will be the expected approval and launch next spring of a new cystic fibrosis drug known as Kalydeco.

Emmens came out of retirement from Shire to take the Vertex CEO job and help the company build out a commercial team that could sell Incivek and Kalydeco. Prior to his arrival, Vertex had no approved drugs to sell.

"I've been talking to the board about succession since I arrived here," says Emmens, whose three-year employment contract ends in May. "Many CEOs stay too long. I know my skill set and what I was supposed to do at Vertex. Now, it's time to hand over the controls to Jeff."

Sanford Bernstein biotech analyst Geoff Porges says many investors who know Vertex well are not surprised Emmens decided to leave once his three-year contract ended. The timing of the transition is a bit earlier than expected, however.

"The timing of the announcement may be a bit unsettling to investors given the Incivek questions and the upcoming Kalydeco launch, but Leiden is really smart and it will be to Vertex's advantage to have a guy with a science and business background in charge."

Leiden, 56, has a medical degree and was a practicing cardiologist. He has been a Vertex board member since 2009. He is currently a venture capitalist at Clarus Ventures. Prior to that, he served as president and COO of Abbott, where he's best known as the executive in charge of acquiring, developing and launching the rheumatoid arthritis drug Humira.

Humira became a multi-billion dollar blockbuster drug. Sales in the first nine months of 2011 totaled $5.7 billion, making Humira the most important drug at Abbott.

"My job at Vertex will be to transition the company from a single product to become more diversified with multiple products and sustainable growth," said Leiden.

Will Leiden be looking outside Vertex to acquire or license new drugs like he did at Abbott with Humira?

"You always want to look at the landscape for potential in-licensed products, but we have an exciting internal pipeline and my focus will be to bring these medicines to patients first," he said.

One of Vertex's key pipeline drugs is an experimental pill for rheumatoid arthritis, VX-509, currently in mid-stage studies.

"It looks like a better Humira," said Leiden.

The U.S. Food and Drug Administration will make an approval decision on Vertex's cystic fibrosis drug Kalydeco on April 18, 2012.

Vertex shares were up 38 cents to $30.92 in early Thursday trading.

--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; click here to send him an email.

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