Zacks Equity Research on Telaprevir approval in Canada...

Analyst Blog
Vertex's Incivek Approved in Canada
By: Zacks Equity Research
August 23, 2011 |

Vertex Pharmaceuticals Inc. (VRTX - Snapshot Report) recently announced that the Canadian regulatory body has approved Incivek (telaprevir), for treating patients with genotype 1 chronic hepatitis C (HCV) with compensated liver disease, including cirrhosis (scarring of the liver). We note that even though the liver is damaged in patients with compensated liver disease it still functions.

The drug is to be used in combination with pegylated-interferon and ribavirin for the treatment of HCV in both treatment-naïve and treatment-failed patients.

We note that Incivek was approved in the US in May 2011 for the treatment of HCV. Further, during the second quarter of 2011, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommended the approval of Incivek in the European Union (EU) as a treatment for HCV. Partner Johnson & Johnson (JNJ - Analyst Report) anticipates a response from the European regulatory body in the third quarter of 2011. Following the approval, Incivek will be marketed in the EU and certain other territories under the brand name Incivo.

Vertex Pharma has exclusive US commercialization rights to Incivek and has joined hands with Johnson & Johnson and Mitsubishi Tanabe Pharma for the commercialization of the drug outside the US. While Johnson & Johnson is responsible for the commercialization of Incivek outside North America and the Far East, Mitsubishi Pharma will market it in certain areas of the Far East including Japan.

Mitsubishi Tanabe filed for the regulatory approval of Incivek in Japan in January 2011.

The drug which faces competition from Merck & Co. Inc.’s (MRK - Analyst Report) Victrelis, recorded sales of $74.5 million during the second quarter of 2011 (first quarter of the drug’s launch), and helped limit the loss of Vertex Pharma at 82 cents.

Riding on the strong sales of Incivek, total revenue during the second quarter soared 262% to $114.4 million, surpassing the Zacks Consensus Estimate of $54 million. (Read our full coverage on the earnings report at: Incivek Limits Vertex's Losses)

Our View

We currently have a Neutral recommendation on Vertex Pharma. The stock carries a Zacks #3 Rank (Hold rating) in the short-run. We are pleased with the Canadian approval of Incivek as it’s the only marketed drug at Vertex Pharma and, we believe that Incivek will help the company post positive earnings.