Vertex Renegotiates Tax Deal With City of Boston, Ready to Rebound and Start Hiring
August 12, 2015
By Mark Terry, BioSpace.com Breaking News Staff
It was reported today that Cambridge-based Vertex Pharmaceuticals and the city of Boston amended their property tax deal in late July.
In 2011, Vertex and Boston agreed to $12.1 million in tax incentives based on Vertex relocating and expanding to facilities on Fan Pier in South Boston. Vertex also agreed to bring a total of 1,741 jobs to the location. The company fell short by about 25 percent, only employing 1,311 people. The tax deal was reduced to about $9 million.
In May 2011, the U.S. Food and Drug Administration (FDA) approved Vertex’s Incivek for the treatment of hepatitis C. At the time, it was significantly better than anything else being used, able to cure 79 percent of HCV patients faster.
Unfortunately for Vertex, the company only had the market to itself for about two years. On Dec. 6, 2013, the FDA approved Gilead Sciences, Inc. ’s Sovaldi for HCV. On Nov. 22, the FDA also approved Janssen’s Olysio for HCV. Janssen is a Johnson & Johnson company. The products are interferon-free. Sovaldi quickly dominated the market. Vertex halted sales of Incivek in 2014 and laid off 175 people.
The HCV therapeutics market is competitive, with Gilead following up Sovaldi with Harvoni and Chicago-based AbbVie producing Viekira Pak. For the last year Gilead and AbbVie have been in a pricing war for the two products, with Gilead inking an exclusive deal with insurance company Anthem, Inc. and CVS Health Corp., and AbbVie signing a similar deal with Express Scripts Inc..
In March of this year, Vertex terminated three lease agreements on properties in Cambridge, Mass. with BioMed Realty Trust.
Vertex is apparently ready to come roaring back. On July 6, the FDA approved the company’s Orkambi (lumacaftor/ivacaftor) for patients with cystic fibrosis (CF). This is the first medication to treat the underlying cause of CF in patients with two copies of the F508del mutation. The drug comes with a startling price tag of approximately $259,000 for a year’s treatment.
The company projects Orkambi will generate $5 billion in annual revenue by 2018. It also expects to hire 30 more people each year for the next two years, and an additional 20 in fiscal year 2018.
The company recently announced its second quarter earnings with total quarterly revenues of $166 million, up from $133.4 million at the same period in 2014. Six-month revenues were $304.6 million, up from $256.9 million the previous year.
“With the recent approval of Orkambi and continued label and geographic expansion for Kalydeco, we have made significant progress toward our goals of treating many more people with cystic fibrosis and positioning the company for long-term revenue and earnings growth,” said Jeffrey Leiden, chairman, president and chief executive officer of Vertex in a statement. “As we enter the second half of the year, we remain focused on advancing key pipeline programs in CF including VX-661, the EnaC inhibitor VX-371 (P-1037) and our next-generation correctors, and on bringing forward potential new medicines in multiple other diseases.”