The honeymoon is officially over for Vertex. A mere 6 months after gaining a landmark approval for the hepatitis C drug Incivek and quickly vaulting ahead of Merck's rival drug, grabbing a significant chunk of market share, Vertex finds itself grappling with a challenge posed by two biotechs with hot new treatments still in the clinic. And that sudden change of fortune is prompting the company to shift the spotlight to its own impressive pipeline of drug candidates.
Over the first two days of the week Vertex shares ($VRTX) slid 17%, taking a significant chunk out of its market value. The two new darlings of analysts: Pharmasset ($VRUS) and Inhibitex ($INHX), each of which is hard at work on clinical development of new hepatitis C drugs that promise to potentially avoid the need for interferon injections.
"We do now have to think about our portfolio longer term," Vertex CFO Ian Smith told analysts on Monday. The biotech, which is building a massive new headquarters complex in Boston, has a clear shot at gaining billions of dollars in Incivek sales. But the biotech champ is now talking up its market potential for the late-stage cystic fibrosis drug Kalydeco, a follow-up CF program for VX-809 and the next-gen hep C drug VX-222. And Smith was complimentary of Pharmasset, which has had recent successes in the clinic with PSI-7977.
Robert W. Baird's Thomas Russo has emerged as one of the most skeptical analysts following the company. Vertex doesn't face any prospective competition on the hep C front for a couple of years, but there's no free ride for anyone in a drug development field as competitive as this one.