Vertex said today it sold its product royalty rights relating to the hepatitis C drug Incivo® (telaprevir) to Johnson & Johnson unit Janssen Pharmaceutica for $152 million—another move by the biotech giant to refocus on its successful cystic fibrosis drug franchise.
In return, Janssen will stop paying royalties to Vertex on Incivo sales beginning in 2014, while gaining sole authority to market and promote Incivo in most of the world outside North America. The companies’ original 2006 collaboration agreement called for Vertex to market the drug in North America, with Janssen overseeing commercialization in Europe, South America, the Middle East, Africa, and Australia, in return for Janssen paying Vertex $165 million up front, with the potential for additional payments up to $380 million based on milestones, plus royalties.
"The monetization of Incivo 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," Ian Smith, Vertex’s evp and CFO, said in a statement.
Vertex said it will pay Janssen during the current quarter, and has increased its 2013 year-end guidance for cash, cash equivalents, and marketable securities in excess of $1.4 billion as a result of the latest Janssen deal.
Vertex sold its royalty rights to Incivo less than a month after disclosing plans to eliminate 370 jobs, some 15% of its total workforce, with about half the layoffs (175 positions) to be carried out in its headquarters state of Massachusetts.
The job cuts, mostly in sales, are projected to save Vertex between $150 million and $200 million annually. The cuts followed a 66% year-to-year drop in sales for its hepatitis C drug Incivek during the third quarter, to $85.6 million. Vertex blamed the sales drop on increasing competition from newer hep C drugs, including those new to market drugs and those nearing approval.
Vertex ended the quarter with a $124.1 million loss, more than double the $57.5 million loss recorded in Q2 2012.