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UPDATE 1-Vertex cuts jobs, forecast as hep C drug sales plunge

Tuesday, 29 Oct 2013 | 10:07 AM ET

Oct 29 (Reuters) - Vertex Pharmaceuticals Inc lowered its full-year revenue forecast and said it would cut about 15 percent of its workforce after sales of its hepatitis C drug plunged in the third quarter.

Vertex shares fell as much as 5 percent to $72.57 in early trading on Tuesday.

The company's hepatitis C treatment, Incivek, was hugely popular when it was launched in May 2011 and revenue from the drug topped $1 billion in a few months.

However, sales of the drug peaked by the end of that year and have tumbled since as patients wait for new drugs that do not need to be taken with the injected drug interferon, which causes flu-like symptoms.

Incivek sales fell 66 percent to $85.6 million in the third quarter and were responsible for a much larger-than-expected quarterly loss.

Most of the 370 jobs the company is eliminating are from the team that is selling Incivek. Vertex said it would incur a related restructuring charge of about $35 million to $45 million in 2013.

Incivek faces competition from all-oral hepatitis C treatments being developed by Abbvie Inc, Bristol-Myers Squibb Co and Gilead Sciences Inc.

Gilead's sofosbuvir was backed by the an advisory committee to the U.S. Food and Drug Administration last week and, if approved, is expected to further erode Incivek sales.

Vertex is also developing an interferon-free hepatitis C drug, but it was placed on partial clinical hold by U.S. health regulators in July, after three patients taking the drug showed signs of liver damage.

NEW FOCUS

Apart from the oral hepatitis C treatment, Vertex said it would now focus on developing its cystic fibrosis drug Kalydeco for wider use.

Kalydeco, which treats cystic fibrosis in patients with a particular genetic mutation, has been boosting Vertex's revenue in the last couple of quarters.

Revenue from the drug more than doubled to $101.1 million in the third quarter.

Vertex raised its full-year forecast for Kalydeco sales to $360 million-$365 million from the $345 million-$360 million it forecast in July.

The company said the job cuts, nearly half of which would be in Massachusetts, would help to reduce operating expenses by $150 million to $200 million in 2014.

Vertex said it now expects full-year revenue to be in the range of $1 billion to $1.05 billion, down from its previous forecast of $1.1 billion to $1.2 billion.

The company's net loss increased to $124.1 million, or 54 cents per share, from $57.5 million, or 27 cents per share, a year earlier.

Analysts on average had estimated a loss of 34 cents per share for the quarter ended Sept. 30.

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