Vertex Cuts 15% of Workforce as Hepatitis C Drug Sales Drop
Vertex Pharmaceuticals had a brief moment in the sun with its hepatitis C drug, and now that it’s coming to an end, the company is making some big job cuts.
Cambridge, MA-based Vertex (NASDAQ: VRTX) said today it is cutting 370 jobs, about 15 percent of its workforce, after a dismal third-quarter sales performance for its hepatitis C drug telaprevir (Incivek). Most of the jobs are related to support of the product, and 175 of the jobs being lost are in Massachusetts, the company said. Vertex will have about 1,800 employees total, and 1,300 in Massachusetts, after the cuts, the company said.
Vertex said the cuts should save $150 million to $200 million in operating expenses next year, and allow it to focus more on its treatments for cystic fibrosis and other therapies in development. The company reported a net loss of $124 million in the quarter ended Sept. 30.
The hepatitis C story has been a tumultuous one at Vertex the past 18 months. The company’s drug, a protease inhibitor given in combination with standard interferon alpha and ribavirin, generated just $86 million in sales in the third quarter. That was below analyst estimates of about $120 million, and way off from the product’s glory days. The product was approved by the FDA in May 2011 after showing it could almost double the cure rate for hepatitis C. It came blazing out of the gate with $951 million of sales in its first six months on the market.
But Vertex has since been upstaged by a group of competitors, including Gilead Sciences and AbbVie, which are in hot pursuit of “all-oral” combination treatments in development for hepatitis C that cure more people and do it without the associated flu-like side effects of injectable interferon alpha, which must be taken with the Vertex treatment. The “all-oral” regimens aren’t FDA approved yet, but clinical data evidence for them has been mounting, and Gilead Sciences won a unanimous endorsement from an FDA advisory panel last week, meaning it is likely to reach the market quite soon. That means patients in line for treatment have an incentive to wait a while for the new therapy, and forgo the Vertex drug.
“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. 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 CEO Jeff Leiden said in a statement.
Vertex said in its third-quarter report that it generated $101 million in sales of its cystic fibrosis treatment, ivacaftor (Kalydeco). The company had $1.4 billion in cash in the bank at the end of September, and plans to continue to invest in cystic fibrosis and other pipeline programs, including VX-135, a hepatitis C drug that could become part of an “all-oral” combo regiment. That drug, however, is far behind Gilead and others in development.