Vertex Pharmaceuticals said that it is cutting 15 percent of its workforce as a competitor’s treatment for hepatitis C edges closer to approval. It also reported a loss for its fiscal third quarter, including lower-than-expected revenue.
DETAILS: Food and Drug Administration advisers last week voted in favor of a hepatitis C drug from Gilead Sciences that could help millions of Americans infected with the liver-destroying virus. The FDA is not required to follow the group’s advice, though it often does, which has increased expectations that the drug will reach the market.
Standard treatment for most of the last 20 years involved a grueling one-year regimen of pills and injections that causes flu-like symptoms and cured fewer than half of patients. In 2011, the FDA approved two new drugs, including Incivek from Vertex, that raised the cure rate when combined with the older treatments. Gilead’s once-a-day pill appears to push the cure rate even higher.
Given the pending threat to its existing hepatitis C business, Vertex said Tuesday that it will focus on opportunities in cystic fibrosis, an all-oral hepatitis C treatment and other research to position itself for future growth. It is cutting 370 jobs, primarily related to Incivek.
That move is expected to reduce 2014 operating expenses by $150 million to $200 million.
NUMBERS: Vertex posted a loss of $124.1 million, or 54 cents per share, for the quarter that ended Sept. 30. That is compared with a loss of $57.5 million, or 27 cents per share, last year.
The Cambridge, Mass., company recorded restructuring charges of $11 million in the third quarter tied to the job cuts. On an adjusted basis, the company posted a loss of 32 cents per share versus earnings of 13 cents per share last year.
Total revenue fell to $221.7 million from $336 million, as Incivek sales slid by two-thirds, to $85.6 million.
Analysts polled by FactSet were anticipating a loss of 33 cents per share with revenue of $275.1 million.
FUTURE: Vertex now expects total revenue of $1 billion to $1.5 billion for 2013, down from its forecast in July of revenue between $1.1 billion to $1.2 billion. Analysts had forecast $1.16 billion.
STOCK: Shares fell $2.05, or 2.6 percent, to $75.78 by midday.