Why Vertex Pharmaceuticals' Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biotechnology company Vertex Pharmaceuticals (Nasdaq: VRTX  ) dropped as much as 17% after the company reported much-worse-than-expected third-quarter results.

So what: For the quarter, Vertex reported a 40% decline in Incivek sales over the year-ago period and a loss of $0.27 per share -- which includes a $57.6 million charge related to expected future payments to Alios BioPharma. Vertex did stick with its full-year forecast for Incivek sales of $1.1 billion to $1.25 billion; however, it made it clear that it's begun its focus on creating the next generation of hepatitis-C treatments that aren't interferon-based. Vertex announced that it'll be testing one of its experimental hepatitis-C therapies, VX-135, in two separate trials with Johnson & Johnson's (NYSE: JNJ  ) simeprevir, and GlaxoSmithKline's (NYSE: GSK  ) GSK2336805.

Now what: It's a little disconcerting to see how quickly Incivek sales are falling off, but I think it's also worth noting that few alternatives to Incivek are likely to hit the market anytime soon. Gilead Sciences' (Nasdaq: GILD  ) GS7977 when combined with Bristol-Myers Squibb's (NYSE: BMY  ) daclatasvir, appears to be the strongest combination candidate for hepatitis-C approval, but it may be years before it takes significant share from Incivek. Personally, I think today's fall could be a buying opportunity in Vertex.

Craving more input? Start by adding Vertex Pharmaceuticals to your free and personalized watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Vertex Pharmaceuticals, Johnson & Johnson, and Gilead Sciences, as well as buying calls on Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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