Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Falling Revenue? Who Cares!

Vertex Pharmaceuticals' (NASDAQ: VRTX  ) revenue peaked in the third quarter of 2011 at $659 million. Since then, revenue from Incivek has slowly fallen as patients have decided to wait for other hepatitis-C drugs, and the company's cystic fibrosis drug, Kalydeco, hasn't been able to make up the difference.

Investors could care less. There's no correlation between revenue and stock price.

VRTX Revenue Quarterly Chart

VRTX Revenue Quarterly data by YCharts.

This year, sales of Incivek in Europe -- where Johnson & Johnson (NYSE: JNJ  ) sells the drug under the brand name Incivo -- are expected to increase, because there's less warehousing of patients for new treatments in Europe. Sales of Kalydeco will also ramp up in 2013 as Vertex launches the drug in additional countries. Neither will make up for declining sales of Incivek where Vertex books sales, which will fall below the magic $1 billion this year. Vertex is guiding for 2013 revenue between $1.10 billion to $1.25 billion, which is below the fourth-quarter run rate of $1.34 billion.

Investors have shrugged off Vertex's falling revenue because of its potential. To expand its hold on the cystic fibrosis market, the company is testing Kalydeco in combination with a newer drug VX-809, which Vertex hopes will help a larger number of cystic fibrosis patients. The company expects to begin a phase 3 program this quarter, putting data a ways away.

Vertex also has some second-generation hepatitis-C drugs. There's no way it beats Gilead Sciences (NASDAQ: GILD  ) or AbbVie (NYSE: ABBV  ) to the market; both have all-oral combinations that are in phase 3 development already. Both cocktails are expected to post cure rates in the 95% to 100% range, so beating them on efficacy will be difficult. And once you get in that range, the difference isn't that meaningful anyway. To compete, the all-oral combinations Vertex is working on with Johnson & Johnson and GlaxoSmithKline (NYSE: GSK  )  will have to be safer and/or work quicker to grab some sales in the tail end of the hepatitis-C epidemic.

If you're going to own Vertex at this point, you've got to have patience. It's going to be years before we see revenue as high as they were right after the launch of Incivek.

If you don't have the patience to see it through, Vertex might be more appropriate for your watchlist at this point. The Fool does have a suggestion for a stock you can buy right now, though. It's our top pick for 2013, and you can find out why in this free report. Grab your copy by clicking here.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2228323, ~/Articles/ArticleHandler.aspx, 9/30/2016 11:34:24 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 4:00 PM
VRTX $87.21 Up +2.21 +2.60%
Vertex Pharmaceuti… CAPS Rating: ****
GILD $79.12 Up +1.26 +1.62%
Gilead Sciences CAPS Rating: *****
GSK $43.13 Up +0.23 +0.54%
GlaxoSmithKline CAPS Rating: ***
JNJ $118.13 Up +0.86 +0.73%
Johnson and Johnso… CAPS Rating: *****