Vertex Pharmaceuticals Inc. reported its first-ever profitable quarter built on better-than-expected sales of hepatitis C drug Incivek (telaprevir). The protease inhibitor had sales of nearly $420 million in its first full quarter, blowing away the consensus estimate of $318.6 million and setting a pace to be one of the fastest drug launches ever with potential sales of $1 billion in 2011.

Incivek's $420 million net revenue and $200 million in milestone revenue for European approval from Vertex's collaborator, Beerse, Belgium-based Janssen Pharmaceutica NV, drove Vertex's total revenues for the quarter to more than $659 million, compared with $23.8 million in total revenues for the same quarter of 2010. Non-GAAP net income was about $151 million, or 70 cents per share. Vertex ended the quarter with about $659 million in cash.

Apart from Incivek's stellar quarter, Vertex execs had other good stories to talk about.

In addition to progress reports on more than a dozen ongoing and planned clinical trials for a pipeline of hepatitis C, cystic fibrosis, rheumatoid arthritis, epilepsy and influenza programs, Vertex submitted a new drug application with the FDA and a marketing authorization application to European Medicines Agency (EMA) for Kalydeco (ivacaftor, formerly VX-770), a cystic fibrosis transmembrane conductance regulator protein potentiator. Vertex requested priority review from the FDA and has received agreement from the EMA for accelerated assessment in Europe.

If the FDA approves Kalydeco in the first half of next year, Vertex would be a singular story in today's biotech sector – a midsized biotech that, in less than a year's time, got two products through to the market in the U.S. (See BioWorld Today, Oct. 20, 2011.)

But the reaction by some analysts and investors seemed to affirm that every silver lining has its cloud.

Cowen and Co. analyst Phil Nadeau wrote that Incivek's third quarter results were "unquestionably impressive" although not unexpected, as investor expectations "had increased dramatically in recent weeks." Moreover, his firm has upped its fourth quarter Incivek sales estimates from $350 million to $450 million.

But Nadeau also questioned whether Incivek has plateaued during its first full quarter. "Although we think Incivek's most rapid growth is clearly in the past, we expect sales to continue to increase as lower-prescribing physicians adopt it," he said. While Vertex has provided some reasons for optimism that capacity remains and that Incivek could continue to grow, he said the company "will not convert skeptics, and therefore we expect the debate over whether Incivek has plateaued to continue."

Canaccord Genuity analyst George Farmer wrote that his firm adjusted its fourth quarter Incivek sales estimate to $568 million from $403million, and has increased its 2012 sales estimate to $2.5 billion from $1.9 billion.

But Farmer also cautioned that Incivek sales are peaking and lowered his firm's target stock price, despite the big third quarter, because of "signals that Incivek launch momentum may be waning and on high out-year competitive threats."

Also bullish short-term, but cautious long-term was Leerink Swann's Howard Liang, whose firm increased its fourth-quarter sales estimate from $426 million to $520 million and its 2012 estimates from $2.18 million to $2.28 million.

"We believe Incivek sales already demonstrate that treatment capacity will not prevent Incivek from hitting the current 2012 U.S. sales consensus of approximately $2.05 billion," he wrote. "The question then becomes whether there will be enough patients left."

Brian Abrahams of Wells Fargo Securities added that, "Given the perceived finite life cycle of Incivek, we expect magnified stock reactions to any data points indicating where Incivek sales could peak." His firm also increased fourth quarter sales estimates from $384 million to $462 million, and 2012 estimates to $2 billion from $1.7 billion.

Vertex launched Incivek shortly after the FDA approved the protease inhibitor in hepatitis C virus patients in May. Second-quarter sales of roughly $75 million bested predictions and left most analysts anticipating Vertex's third-quarter profit. (See BioWorld Today, May 24, 2011, and Aug. 1, 2011.)

The Cambridge, Mass.-based biotech's shares (NASDAQ:VRTX) were down $1, to $41.58 at close Friday.

In other earnings news:

• Biogen Idec Inc., of Cambridge, Mass., posted third quarter revenues of $1.3 billion, slightly ahead of the $1.27 billion analysts had expected. Non-GAAP net income for the quarter was $395 million, or $1.61 per share, beating the $1.53 per share analysts had expected. Tysabri (natalizumab) revenues were $277 million, Avonex (interferon beta-1a) revenues were $682 million, and Rituxan revenues were $266 million. As of Sept. 30, Biogen had cash, equivalents and marketable securities of $2.9 billion.

• BioMarin Pharmaceutical Inc., of Novato, Calif., reported third quarter revenue of $113.4 million, in line with analyst expectations, and a net loss of $17.7 million, or 16 cents per share. Net revenues for mucopolysaccharidosis enzyme replacement therapies Naglazyme (galsulfase) and Aldurazyme (laronidase) were $55.9 million and $23 million, respectively. Revenues were $30.5 million for phenylketonuria drug Kuvan (sapropterin dihydrochloride) and $3.5 million for Firdapse (amifampridine phosphate). As of Sept. 30, BioMarin's cash position totaled $370 million.

• Dyax Corp., of Cambridge, Mass., reported third-quarter sales of hereditary angioedema drug Kalbitor (ecallantide) totaling $6.6 million, and total third quarter revenues of $10.1 million. Analysts had expected revenues to total $8.8 million. The company posted a net loss of $9.7 million or 10 cents per share, for the quarter, beating analyst estimates of a 13-cent loss. As of Sept. 30, Dyax had cash, equivalents and investments totaling $48.4 million.

• Gilead Sciences Inc., of Foster City, Calif., posted third quarter revenues of $2.12 billion and non-GAAP net income of $795.2 million, or $1.02 per share, generally in-line with analyst estimates. In the HIV franchise, sales of Atripla (emtricitabine/efavirenz/tenofovir disoproxil fumarate) were $794.7 million, Truvada (emtricitabine/tenofovir disoproxil fumarate) were $744.7 million, and Complera (emtricitabine/rilpilvirine/tenofovir disoproxil fumarate) were $19 million. Viread (tenofovir disoproxil fumarate) for HIV and HBV sold $192.9 million. Sales of cardiovascular drugs Letairis (ambrisentan) and Ranexa (ranolazine) were $79 million and $82 million, respectively, both representing gains of more than 30 percent. As of Sept. 30, Gilead had cash, equivalents and marketable securities of $5.48 billion. In separate news, Gilead submitted a new drug application for its new Quad (elvitegravir, cobicistat, emtricitabine and tenofovir disoproxil fumarate) HIV pill.

• Regeneron Pharmaceuticals Inc., of Tarrytown, N.Y., posted a third quarter net loss of $62.4 million, or 68 cents per share, better than the 76-cent loss analysts had expected. The firm's total revenue was $102.8 million, and sales of Arcalyst (rilonacept) for cryopyrin-associated period syndromes were $5.5 million. Cash and securities as of Sept. 30 were $511.7 million. Analysts continue to await the Nov. 18 PDUFA date for Eylea (VEGF Trap-Eye) in age-related macular degeneration.