National Editor

In line to gain up to $33 million - most by the end of 2006 - Vertex Pharmaceuticals Inc. entered a deal with Mitsubishi Pharma Corp. for the development and commercialization of the Phase I hepatitis C drug VX-950 in Japan and the Far East.

"Baked in there is $17 million in cost-sharing for core development costs through Phase II," said Michael Partridge, Cambridge, Mass.-based Vertex's director of corporate communications. The remainder is milestone payments for clinical development, mostly in Japan, and license fees.

Partridge noted the $33 million is "in addition to any development undertaken in Japan and the Far East" - development that might be helped by Vertex's work.

Mitsubishi would not "necessarily run the same study, but data from our Phase I study could be used in support of theirs," Partridge said. "It's always easier to initiate a Phase I study and you have some results and you know what to expect."

Further cost-sharing beyond Phase II will be determined by the firms, based on the design of registration studies for VX-950. Vertex also gets royalties on Mitsubishi sales and an option to supply bulk drug material to the Tokyo-based company.

Vertex's stock (NASDAQ:VRTX) closed Monday at $9.48, up 23 cents.

VX-950 is Vertex's lead oral protease inhibitor for the hepatitis C virus. Preclinical data have shown the drug knocks down levels of HCV RNA in the replicon system and infectious virus assays within days, the company said, and the compound appears to achieve excellent exposure in the liver. A Phase I trial began early this month in about 35 healthy volunteers.

Also for HCV, Vertex has the oral drug merimepodib (also known as VX-497), an inhibitor of inosine monophosphate dehydrogenase (IMPDH), to which the company owns all rights. Blocking IMPDH reduces intracellular guanosine triphosphate, needed for DNA and RNA synthesis, and Vertex is developing merimepodib in combination with the standard therapy of injected pegylated interferon-alpha and ribavirin. Merimepodib is about to enter Phase IIb trials in treatment-experienced patients, Partridge said.

Worldwide, HCV hits about 185 million people, with 8,000 to 10,000 people dying in the U.S. annually from complications. The customary combination therapy works for only 40 percent to 50 percent of patients chronically infected with genotype-1 HCV, which is the most difficult strain to treat and the most common form in the U.S.

Vertex's structure-based drug design already has yielded the FDA-approved HIV protease inhibitors Agenerase and Lexiva, developed with London-based GlaxoSmithKline plc. A third-generation protease inhibitor in the works for HIV with GSK, VX-385, has yielded positive preclinical data.

But the company's road hasn't always been smooth. In November, its stock nose-dived on word that a Phase IIb trial testing pralnacasan for rheumatoid arthritis with partner Aventis SA, of Strasbourg, France, was delayed because of liver abnormalities in an animal toxicology study. In January, Vertex said the drug missed its endpoint in a Phase II study in osteoarthritis. (See BioWorld Today, Nov. 12, 2003.)

The following month, though, the company pulled down the promise of another $100 million through 2006 from its four-year-old deal with Novartis Pharma AG, of Basel, Switzerland, to develop small-molecule kinase inhibitors. When the deal first was formed, it was said to be worth up to $800 million. (See BioWorld Today, May 10, 2000.)

Also likely to help is the $21 million due from an expanded partnership to develop therapeutics with Cystic Fibrosis Foundation Therapeutics Inc., the nonprofit drug discovery and development affiliate of the Cystic Fibrosis Foundation. (See BioWorld Today, May 25, 2004.)

Vertex had more than $583 million in cash at the end of 2003, and showed a net loss of almost $197 million, with nearly $200 million in spending on research and development.

The R&D spending "certainly was a significant amount for us, considering the proportion [that] we carried ourselves," Partridge acknowledged. "What we've showed so far in 2004, and expect to continue to show, is that we have the ability to significantly hedge that investment with partnerships."

He cited the deals with Cystic Fibrosis and Mitsubishi as examples, and said Vertex is exploring "a number of other areas" in which similar agreements might be made.

"It's a theme for 2004," he told BioWorld Today, adding that the strategy involves "more than taking the edge off" of R&D spending. "These are value-creating and value-sustaining opportunities," he said.

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