Vertex Pharmaceuticals waved the white flag for its once high-flying hepatitis C drug last month. Now it’s pooling as much cash from that program as it can to help concentrate its efforts in cystic fibrosis.
Cambridge, MA-based Vertex (NASDAQ: VRTX) said today that it has sold its non-North America royalty rights to telaprevir (sold as Incivo in Europe, Incivek in the U.S.) to marketing partner Janssen Pharmaceutica for a one-time cash payment of $152 million that the company will receive in the fourth quarter. Vertex will stop getting royalty checks from Janssen once the calendar flips to 2014.
Vertex signed a deal with Janssen to help sell the drug internationally. The Cambridge company kept U.S. rights to the drug and royalties on sales overseas, but handed Janssen the rights to sell telaprevir in Europe and several other countries. Vertex got $165 million up front from Janssen, a subsidiary of Johnson & Johnson, and was promised up to $380 million in additional milestone payments.
Though telaprevir went on to become a huge success, its stardom was short-lived. New, competing treatments for hepatitis C that promise an “all-oral” combination regimen without injectable interferons and their flu-like side effects are emerging. Gilead Sciences (NASDAQ: GILD) and AbbVie (NYSE: ABBV) are both racing to bring such treatments to the market, and this has left telaprevir— a protease inhibitor that is given in combination with injectable interferon alpha and ribavirin—as a lame duck treatment. The drug generated just $86 million in sales in the third quarter, well below analyst estimates of about $120 million, and a long ways away from the eye-popping $951 million in sales it generated over its first six months on the market in 2011.
As a result, Vertex has jumped ship on the drug. Just weeks ago, it announced plans to cut 370 jobs, about 15 percent of its workforce, after releasing the drug’s latest disappointing sales numbers. Most of the positions it’s cutting are related to promotion and support of telaprevir. Now, the cash from the royalty stream will help Vertex further turn its attention to its cystic fibrosis drug, ivacaftor (Kalydeco).
“The monetization of [telaprevir] royalties provides cash to enhance our corporate financial position and continues to position us to support our investment in cystic fibrosis and to advance other key opportunities in our pipeline,” said Vertex executive vice president and CFO Ian Smith, in a statement.