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Vertex Shatters Sales Goal for Hepatitis Drug


Robust sales help biotech post first profit. Sales of Incivek are on pace to exceed $2 billion next year.

Vertex Pharmaceuticals' (VRTX) blew away sales estimates for its hepatitis C drug Incivek last quarter, putting to rest weeks of speculation whether the product's momentum was on the wane.

While some analysts predicted sales as low as $300 million for the three months ending September 30, Vertex said late Thursday that Incivek posted revenue of $420 million for the period. In pre-market trading Friday, the shares rose only 1%. Tough crowd.

Drug launches are facing increased scrutiny from investors following Dendreon's (DNDN) disastrous stumble with prostate cancer treatment Provenge this year and Human Genome Sciences' (HGSI) laggard sales of new lupus drug Benlysta. (See Human Genome Drops on Lupus Drug.)

Vertex execs made it clear that they're having no such problems with their launch.

"Early Incivek revenues are impressive and we have only just begun to treat the many people living with hepatitis C," Vertex CEO Matthew Emmens told investors and analysts on a conference call.

US officials estimate more than 3 million Americans have chronic hepatitis c, a virus that can ultimately destroy a person's liver. It's believed many people have carried the virus for years without knowing it.

The robust sales of Incivek helped Vertex post its first profit: $221 million, or $1.02 a share in the quarter, compared with a loss of $209 million in the year-earlier period. Total revenue, which includes collaboration and royalty payments, was $659 million in the third quarter.

Though it's early, Incivek is on pace to record more than $550 million in sales this quarter and at least $2.2 billion for 2012, Robert W. Baird analyst Thomas Russo estimates. He recommends buying the stock and has a price target of $62.

Shares of Vertex rose to $42.99 in pre-market trading Friday. The stock is down 11% over the past month.

To be sure, Vertex faces likely future competition in what's becoming a crowded field of rivals developing hepatitis C therapies. Merck (MRK) actually beat Vertex to market in May, though Vertex is winning the war for market share handily so far. (See Merck's FDA Win Bodes Well for Vertex.) Victrelis only produced $31 million in sales in the third quarter and a total of $53 million since its launch, according to Merck's earnings announcement Friday morning.

Other drug makers are working on potentially superior hepatitis treatments. Rival biotech Pharmasset (VRUS) has a promising drug in development. Big pharma companies such as Abbott Laboratories (ABT) and Roche also are studying therapies for the disease. Johnson & Johnson (JNJ) collaborated with Vertex on Incivek and has sales rights to the drug in Europe. J&J also is working on its own hepatitis drug. Roche is collaborating with Pharmasset and is buying Anadys Pharmaceuticals (ANDS) to round out its R&D for the disease. (See Roche Makes $230 Million Bet on Hepatitis C Developer Anadys.)

Emmens touted his company's drugs in development, which includes a cystic fibrosis treatment and next-generation therapies for hepatitis. He noted that the company will be making the rounds of scientific conferences next month, releasing additional data on Incivek and other drugs in development.

"We have set a high bar in the treatment of hepatitis C," he said. "Our goal is to sustain leadership in this disease."

Twitter: @brettchase

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