NEW YORK (AP) - Shares of Vertex Pharmaceuticals Inc. continued to slide on concerns that its hepatitis C drug Incivek, which was approved earlier this year, will be overtaken by newer drugs.
In the last few days, several companies that are developing hepatitis C drugs reported results from recent clinical trials. Analysts had expected Incivek to be a mainstay in the treatment of hepatitis C and predicted billions of dollars in annual sales for Vertex. The drugs being studied by Pharmasset Inc. and Inhibitex Inc. are several years away from the market, but analysts say they could challenge Incivek as new standard treatments for the disease.
Incivek was approved in the U.S. in late May and has since been approved in the European Union, Canada, Europe and Japan. In late October, Vertex said sales of Incivek totaled $420 million in the third quarter, which was its first full quarter on the market.
During a conference call, Vertex acknowledged that data from competitors looked strong. Chief Financial Officer Ian Smith said the data from Pharmasset, which has a drug in late-stage testing, was "a tremendous result for the field." Smith said the company still expects billions of dollars in sales of Incivek but indicated it is beginning to focus on its other drug candidates.
"We do now have to think about our portfolio longer term," Smith said.
The Cambridge, Mass., company says it has more than a dozen active clinical trials. It is studying another hepatitis C drug, VX-222, along with treatments for cystic fibrosis, rheumatoid arthritis, and epilepsy. In October the company filed for U.S. and European marketing approval of a cystic fibrosis drug called Kalydeco. Both Kalydeco and another cystic fibrosis treatment, VX-809, have received incentives from regulators.
Robert W. Baird analyst Thomas Russo lowered his rating on the stock to "Neutral" from "Outperform." He said Vertex sounded like it is not sure how to proceed and is not sure it can defend its market position after 2014, when the newer hepatitis C drugs could reach the market. Russo said the side effects of some of the experimental drugs also look less severe than the side effects associated with Incivek.
"It's becoming increasingly clear the problem long term isn't necessarily sustaining Incivek, it could actually be Incivek," he wrote.
Date: November 8, 2011
Source: Associated Press