Vertex Pharmaceuticals Inc. (VRTX) will cut 370 jobs after revenue from the hepatitis C drug Incivek declined and its third-quarter loss widened.
The firings represent a 15 percent reduction of the company’s total workforce, Vertex said in a statement today. The Cambridge, Massachusetts-based company said it expects its 2014 operating expenses will be $150 million to $200 million less than this year’s, and it will take $35 million to $45 million in 2013 restructuring charges.
Vertex reached profitability briefly in 2011 after Incivek was approved by the U.S. Food and Drug Administration to treat hepatitis C, a chronic liver disease that affects about 150 million people worldwide. Sales of the drug peaked at $456.8 million in the fourth quarter of 2011 before beginning to decline as doctors and patients started to anticipate newer medicines hitting the market, including one from Gilead Sciences Inc. (GILD) called sofosbuvir.
“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,” Chief Executive Officer Jeffrey Leiden said in the 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.”
Vertex will turn its focus to cystic fibrosis and other programs in its pipeline, the company said.
The third-quarter loss widened to $124.1 million, or 54 cents a share, from $57.5 million, or 27 cents, a year earlier, according to a separate statement. Excluding one-time items, the loss was 32 cents a share, missing the average loss of 16 cents from 12 analysts’ estimates compiled by Bloomberg.
The company lowered its 2013 revenue forecast to $1 billion to $1.05 billion, from a previous projection of as much as $1.2 billion.
Vertex sank 2.2 percent to $76.09 at 4 p.m. New York time. The shares have increased 82 percent this year.
Vertex’s other approved therapy, Kalydeco for cystic fibrosis, is gaining sales while Incivek is declining. Incivek revenue fell 66 percent to $85.6 million in the quarter, while Kalydeco sales more than doubled to $101.1 million, Vertex said. Total revenue fell 34 percent to $221.7 million, missing analysts’ average $275.8 million estimate.
Vertex increased its forecast for 2013 Kalydeco sales, to as much as $365 million. The drug was approved in January 2012 to treat a rare form of cystic fibrosis, a genetic disease that affects about 30,000 people in the U.S. The company also is testing additional medicines for the disease, as well as for hepatitis C, autoimmune diseases and influenza.
The workforce reductions leave Vertex with about 1,800 employees worldwide, the company said.
“We are expecting to see Incivek’s sales continue to fall steadily through the end of this year and until sofosbuvir is approved by the FDA, at which time we expect Incivek sales to essentially fall to zero,” Brian Skorney, an analyst with Robert W. Baird, wrote in an Oct. 25 research note. “Investors have now largely realized that Incivek will ultimately be a short-lived asset.”
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