Curing diseases is great for patients, but as a business model, it rather stinks.
Q2 2011 (in millions)
Q3 2011 (in millions)
Q4 2011 (in millions)
Source: Company releases.
Too bad it won't last. Once a patient is rid of the virus, they don't need the drug anymore.
Vertex is guiding for revenue of $1.5 billion to $1.7 billion. Impressive for the first full year of a launch, especially since it doesn't include sales in Europe, where Johnson & Johnson
Even if Vertex hits the top of its guidance, that's only an average of $425 million per quarter, under what Vertex sold in the fourth quarter; we're either at or near its peak sales. Investors' best hope is that sales flatten out for a period instead of face a steeper ramp down -- assuming Vertex didn't lowball its estimate, of course.
However the ramp-down happens, it appears that Vertex is running out of patients to treat. Hepatitis C infection generally isn't immediately life-threatening, so patients have the ability to delay treatment, which worked in Vertex's favor as they waited for its approval, but it also means many patients can now wait for an all-oral combination being developed by Gilead Sciences
If Incivek was all Vertex had, I'd be tempted to say write off the company and move on. But it recently gained approval of cystic fibrosis drug Kalydeco, which is used on only a subset of cystic fibrosis patients, but could be combined with other drugs to be used on a larger population.
At least Vertex will have plenty of cash coming in -- for now -- to help fund research for its next big thing.
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