Yahoo Finance Vertex Pharma rises despite lower Incivek sales
Vertex shares rally as sales of cystic fibrosis drug rise; US sales of hepatitis C drug plunge
NEW YORK (AP) -- Shares of Vertex Pharmaceuticals rose Thursday as investors turned their focus to the drugmaker's treatment for cystic fibrosis to help offset plunging sales of its hepatitis C drug Incivek.
THE SPARK: Vertex posted its fourth-quarter results on Wednesday. It said U.S. sales of Incivek plunged 91 percent to $19.3 million while royalty payments fell by a smaller amount. However sales of its cystic fibrosis treatment Kalydeco nearly doubled to $109.5 million. Those two drugs are Vertex's only approved products.
THE BIG PICTURE: Vertex Pharmaceuticals Inc. started selling Incivek in 2011. At the time it was a highly anticipated drug for patients with the liver-destroying hepatitis C virus, and sales surpassed $1 billion in 2012. But the drug now faces stiff competition from a wave of newer medications like Gilead Sciences Inc.'s Sovaldi and Johnson & Johnson's Olysio, which were both approved late last year.
The company also said Wednesday that it wrote down the entire value of one experimental treatment for hepatitis C and took an impairment charge related to another. Vertex said in 2013 it would cut 370 jobs, or 15 percent of its workforce, because of competition from rival hepatitis C treatments.
In November the company agreed to sell the overseas marketing rights to its hepatitis C treatment Incivek to Johnson & Johnson, which had been its partner on the drug, for $152 million.
For the full year, U.S. sales of Incivek dropped 60 percent to $466 million while royalty revenue rose slightly, to $130.7 million. Kalydeco sales more than doubled to $371.3 million.
THE ANALYSIS: Maxim Group analyst Jason Kolbert said sales of Kalydeco sales were better than he expected. He also anticipates good results from trial of Kalydeco and a newer drug, saying the data from that study could give Vertex's stock a boost. Kolbert maintained a "Buy" rating on the stock with a price target of $88.
Cowen and Co. analyst Phil Nadeau said fourth-quarter sales of Kalydeco were good, but further growth will have to come from new marketing approvals in new markets. He said the company is almost entirely focused on cystic fibrosis now because of the drop in Incivek sales and the setbacks for other hepatitis C drugs and VX-509, its experimental treatment for rheumatoid arthritis.
Nadeau rates the stock "Market Perform" with a price target of $75 per share.
SHARE ACTION: Vertex Pharmaceuticals shares picked up $4.28, or 5.4 percent, to $83.10 in afternoon trading. The stock has risen 49 percent since April, when the company reported positive trial results for a cystic fibrosis regimen that combines Kalydeco with the experimental VX-661.
