By Kim Coghill

Washington Editor

Vertex Pharmaceuticals Inc. and Serono SA signed an agreement worth up to $95 million to Vertex for the discovery and development of caspase inhibitors to treat neurological and inflammatory diseases.

The companies anticipate selecting the first drug development candidate next year.

Under terms of the agreement, Cambridge, Mass.-based Vertex will receive $5 million in payments for prior research and also could receive up to $20 million in research funding over the next five years. Vertex could receive an additional $70 million in milestone payments for the successful development and commercialization of more than one drug candidate. The companies will share development costs.

"We expect this collaboration will lead to the discovery of novel drugs to treat neurological and inflammatory diseases, and a successful drug targeting these areas has tremendous potential," Richard Aldrich, Vertex's senior vice president and chief business officer, said during a conference call Tuesday. "Since our goal is to bring potential new therapies to market worldwide, we will benefit from Serono's position and experience in international markets."

Vertex and Geneva, Switzerland-based Serono will establish a joint venture for the commercialization of products in North America, where they will share marketing rights and profits from the sale of caspase inhibitors. Serono will have exclusive rights to market in other territories, excluding Japan and other countries of the Far East, and will pay Vertex for the supply of drug substance.

Serono, which operates in 45 countries and sells products in more than 100 countries, had 1999 worldwide sales of $1.054 billion and a net income of $183.7 million, a statement released by Vertex said.

Vertex develops, discovers and markets small-molecule drugs and has conducted extensive research into the role of caspases in disease. As part of its discovery in the caspase protein family, Vertex has determined the 3-dimensional atomic structure of several caspases and caspase inhibitor co-complexes.

Scientists have discovered that caspase inhibitors comprise a family of 11 known human enzymes that play specific roles in apoptosis (programmed cell death) and inflammation. To increase the pace of drug discovery for structurally similar targets such as caspases, Vertex has pioneered the field of chemogenomics, which unites genomic information, structural biology and computational chemistry with other aspects of drug discovery, Vertex said.

"There will be no transfer of technology or intellectual properties to Serono under this agreement," Aldrich said. "Our goal is for this collaboration to produce multiple caspase inhibitor candidates and we are not limited to a certain number of candidates."

Aldrich said the collaboration with Serono is the third such deal that Vertex has entered, giving the company a total of $350 million for the family of 11 targets.

The other programs are with Taisho Pharmaceutical Co. Ltd., of Tokyo, and Frankfurt, Germany-based Aventis SA (formerly Hoechst Marion Roussel).

In the Taisho deal, the companies partnered to discover, develop and commercialize caspase inhibitors to treat cerebrovascular, cardiovascular and neurodegenerative diseases. The agreement is worth up to $43 million. (See BioWorld Today, Nov. 30, 1999.)

The agreement with Aventis, which is worth $206 million to Vertex, calls for Aventis to pay $62 million in milestones per indication for the successful development of VX-740, an orally active inhibitor of interleukin-1 beta converting enzyme (ICE). The compound is in Phase II clinical trials. (See BioWorld Today, Sept. 2, 1999.)

"The new alliance with Serono allows Vertex to further optimize the value of our caspase program while keeping a large share of the program's commercial value," Aldrich said. "Overall, with these partnerships, Vertex has substantially covered the costs of our caspase research program and we've covered a large majority of the costs of clinical development of drug candidates emerging from the program. At the same time, we've retained a significant portion of the program's downstream economics."

Vertex's first approved product was Agenerase (amprenavir), an HIV protease inhibitor, which it co-promotes with Research Triangle, N.C.-based Glaxo Wellcome.

Serono has four recombinant products on the market: Gonal-F, Rebif, Serostim and Saizen. The company has market positions in the fields of reproductive health, neurology, metabolism and growth.

Vertex's stock (NASDAQ:VRTX) closed Tuesday at $75.187, down $6.625 or 8 percent.