UPDATE 3-Vertex loss narrows as cystic fibrosis drug sales grow

Mon Jul 29, 2013 6:27pm EDT

By Bill Berkrot

July 29 (Reuters) - Vertex Pharmaceuticals Inc on Monday posted a narrower quarterly loss on stronger-than-expected demand for its cystic fibrosis treatment, and it raised its full-year forecast for sales of the medicine.

The company now expects 2013 sales of the CF drug Kalydeco at $345 million to $360 million, up from its prior view of $300 million to $340 million.

Vertex posted a net loss for the second quarter of $57.2 million, or 26 cents per share, compared with a loss of $65 million, or 31 cents per share, a year ago.

Kalydeco had sales of $99 million for the quarter, up from about $62 million in the previous quarter and easily surpassing Wall Street estimates of about $74 million.

Vertex shares were up 3 percent at $82.01 in after hours trading from a Nasdaq close at $79.66.

"Vertex put up what looks like a fantastic Kalydeco number," ISI Group analyst Mark Schoenebaum said in a research note.

Kalydeco is currently approved for CF patients with a specific gene mutation, accounting for about 4 percent of all patients with the life-shortening lung disorder.

Vertex said a late stage study aimed at broadening the Kalydeco approval to patients with a different gene mutation successfully led to improved lung function, and that it plans to seek expanded approvals in the United States and Europe in the second half of this year. About 400 people ages 6 and older worldwide have the so-called non-G551D gating mutation addressed by the label expansion study.

The company is in late stages of testing another experimental CF drug in combination with Kalydeco that it hopes will be able to help a far larger portion of the CF population and is testing other medicines for potential combination therapies.

Vertex believes nearly all U.S. and European patients now eligible for Kalydeco have begun taking the medicine. As a result, "We do not see meaningful growth for Kalydeco in 2013," Chief Commercial Officer Stuart Arbuckle told analysts on a conference call.

Sales of its market leading hepatitis C treatment Incivek continued their steep decline as patients await new all-oral treatment regimens that could become available as early as next year. The all-oral regimens do not require difficult-to-tolerate interferon, as Incivek does, and hold the promise of shorter treatment durations.

Incivek sales fell to $156 million from $327.7 million a year ago. They were also down from $205.6 million in the previous quarter and below analysts' estimates of about $182 million.

"We expect this decline to continue for the remainder of the year," Arbuckle said, adding that remaining Incivek sales were still helping to fund the company's many clinical programs.

Investors have largely written off Incivek, which had reached $1 billion in sales more quickly than any drug in pharmaceutical history, only to have sales diminish almost as quickly as other companies reported progress on alternative medicines with fewer side effects.

"Incivek was weak, but no on will care, in my opinion," Schoenebaum said.

Vertex is developing its own candidate - VX-135 - to compete with next-generation hepatitis C regimens. But it suffered a setback last week when the U.S. Food and Drug Administration put a hold on the U.S. trial of the 200-milligram dose of the drug. The FDA took the action following reports of potential liver toxicity in three patients who received the 400-mg dose of VX-135 in a European study.

A U.S. trial testing VX-135 at 100 mg was allowed to continue. Vertex executives said there had been no evidence of liver problems with the 200-mg dose and hopes to provide the FDA with the information it requires to have the partial clinical hold lifted.

"We know the bar is very high in this therapeutic area," the company said.

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