The Massachusetts-based biotech company Vertex is laying off 175 workers in the Bay State and reporting a third-quarter loss amid plummeting sales of its onetime hit hep C drug.
Vertex will eliminate 370 positions, primarily in its Invicek division — about a 15 reduction in its global workforce — with almost half the cuts coming in Massachusetts.
Construction of Vertex's 1.1 million-square-foot, $1 billion new Fan Pier headquarters was contingent on the company winning FDA approval for its hepatitis C drug Incivek in 2011. The company's 15-year lease, which moved its headquarters from Cambridge to South Boston's waterfront, was a huge boost for Mayor Thomas M. Menino's Innovation District.
Two days after the drug maker won federal approval of Incivek, Boston's City Council approved $12 million in tax breaks for Vertex. Vertex also received $2.4 million in state tax incentives from the Massachusetts Life Sciences Center for 2011 — in return for creating 90 jobs — and $50 million in public infrastructure improvements, as well as other state incentives.
The approximately $72 million in total state and city incentives were contingent upon creation of 500 net new jobs from 2011 through 2015, company spokesman Zach Barber said.
"As part of the Massachusetts Life Sciences Center tax incentive program, we've received approximately $4.4 million of these incentives to date, which we will repay to the state," Barber said.
The cuts are not the first for Vertex, which laid off 111 employees in 2003. Since 2004 when development of Incivek began, the company has added 1,000 jobs worldwide, including 800 in Massachusetts, Barber said.
The cuts represent a sharp decline in the fortunes of Incivek, also known as telaprevir, which once had promised to breathe new life into the pharmaceutical company that invested $4 billion in its development and also deliver significantly higher cure rates for those who suffer from the liver-destroying disease.
Industry analysts had predicted Incivek sales would reach $2 billion in the U.S. and $3 billion worldwide in 2013, with about 170 million infected with hepatitis C around the globe. But, as other new drugs for hepatitis C near approval, the company reported today third-quarter net product revenue of $86 million for Incivek. The company's net loss for the third quarter increased to $124.1 million, or 54 cents per share, from $57.5 million, or 27 cents per share, a year earlier.
"Fewer people are starting treatment with Incivek, and as a result, we are reducing our workforce supporting this medicine," said Jeffrey Leiden, chairman, president and chief executive officer of Vertex, in a statement. "Today is a difficult day for everyone at Vertex, but these changes are necessary as we work to develop new breakthrough medicines in the coming years."
The new job cuts will save $150 to $200 million a year for the company, and allow it to focus on its cystic fibrosis research, the company said. Last year, The FDA approved the company's cystic fibrosis drug Kalydeco. The company reported third-quarter net product revenues of $101 million for Kalydeco today.
"Our business is at a unique point in its evolution. We have a tremendous opportunity ahead of us to further transform the treatment of cystic fibrosis, which continues to be the company's highest priority development program," Leiden said.
The company also will focus on all-oral regimens for hepatitis C.
Following the changes, Vertex expects to have approximately 1,800 employees worldwide, including approximately 1,300 in Massachusetts, the company said in a statement. The cuts will save the company $150 million to $200 million next year.
Founded in 1989 in Cambridge, Vertex has research and development sites and commercial offices in the United States, Europe, Canada and Australia. Its research focuses on cystic fibrosis, hepatitis C, rheumatoid arthritis and other life-threatening diseases.
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