By Vrinda Manocha
(Reuters) - Vertex Pharmaceuticals Inc lowered its full-year revenue forecast and said it would cut about 15 percent of its workforce as sales of its hepatitis C drug plunged further.
Vertex shares fell as much as 5 percent on Tuesday after the company said sales from the drug, Incivek, fell 66 percent to $85.6 million in the third quarter.
Incivek was hugely popular when it was launched in May 2011 and revenue from the drug topped $1 billion in a few months.
However, sales peaked by the end of that year and have tumbled since as patients wait for new drugs that do not need to be taken with the injected drug interferon, which causes flu-like symptoms.
"Vertex was a pioneer in launching one of the first antivirals against hepatitis C. Now they have essentially lost their leadership," Maxim Group analyst Jason Kolbert told Reuters.
The steep drop in Incivek sales was responsible for a much bigger-than-expected increase in the company's quarterly loss.
Most of the 370 jobs Vertex is eliminating are from the team that sells Incivek. The company said it would incur a related restructuring charge of about $35 million-$45 million in 2013.
Incivek faces competition from all-oral hepatitis C treatments being developed by Abbvie Inc, Bristol-Myers Squibb Co and Gilead Sciences Inc.
William Blair analyst Katherine Xu said she expects sales of Incivek to drop to zero when Gilead launches its oral hepatitis C treatment.
Gilead's sofosbuvir was backed by an advisory committee to the U.S. Food and Drug Administration last week and a decision on the drug's approval is expected in December.
Vertex is also developing an interferon-free oral hepatitis C treatment but received a setback when the drug was placed on a partial clinical hold by the FDA in July after three patients taking the drug showed signs of liver damage.
THE FIBROSIS FACTOR
Apart from the oral hepatitis C treatment, Vertex said it would focus on developing its cystic fibrosis drug, Kalydeco, for wider use.
Kolbert, who has a "buy" rating on the stock, said Vertex could expand the use of Kalydeco to a broader population in two years, becoming the leader in the market for cystic fibrosis drugs.
"The majority of the drugs on the market for cystic fibrosis treat the symptoms, not the underlying cause of the disease," he said. "Vertex will have a virtual monopoly on cystic fibrosis drug market for many years to come."
Kalydeco, which treats cystic fibrosis in patients with a particular genetic mutation, has been boosting Vertex's revenue in the last couple of quarters.
Revenue from the drug more than doubled to $101.1 million in the third quarter.
Vertex raised its full-year forecast for Kalydeco sales to $360 million-$365 million from the $345 million-$360 million it forecast in July.
The company said the job cuts, nearly half of which would be in Massachusetts, would help to reduce operating expenses by $150 million to $200 million in 2014.
Vertex said it expects full-year revenue to be in the range of $1 billion to $1.05 billion, down from its previous forecast of $1.1 billion to $1.2 billion.
The company's net loss increased to $124.1 million, or 54 cents per share, from $57.5 million, or 27 cents per share, a year earlier.
Analysts on average had estimated a loss of 34 cents per share for the quarter ended September 30.
Vertex shares were down about 3 percent at $75.24 in afternoon trading on the Nasdaq.
(Reporting By Vrinda Manocha in Bangalore; Editing by Saumyadeb Chakrabarty)