Vertex Refocuses Drug Development to Specialty Diseases

Vertex Pharmaceuticals Inc. (VRTX), maker of the hepatitis C drug Incivek and cystic fibrosis medicine Kalydeco, is refocusing development efforts on specialty diseases, seeking partnerships or alternative sources of funding for some programs.

“There are some things we’re not going to do,” Chief Executive Officer Jeffrey Leiden said in an interview this week at JPMorgan Chase & Co. (JPM)’s annual health-care conference in San Francisco. “That’s new for Vertex.”

Vertex, which received regulatory approval for Incivek in May 2011 and for Kalydeco in January 2012, will seek a partnership for its VX-509 compound for rheumatoid arthritis, which is in mid-stage clinical trials. Vertex will consider collaborations that enable the company to “maintain value long- term,” Leiden said.

The company will look for outside funding for the flu molecule VX-787. “It’s not a specialty disease,” Leiden said. “We’re going to find external funding” for that molecule, and stop funding it internally, he said.

Vertex’s focus is on hepatitis C, for which it is developing next-generation therapies to follow Incivek; cystic fibrosis; and other specialty diseases, such as Huntington’s disease and multiple sclerosis. Incivek drew $950.9 million in 2011 revenue after being approved in May of that year.

Early Approval

Kalydeco, for cystic fibrosis, surprised investors last year with an approval that came three months ahead of its expected deadline. The Cambridge, Massachusetts-based company said this week it was the first to receive a new Breakthrough Therapy Designation from the U.S. Food and Drug Administration, for Kalydeco and its combination with another medicine for cystic fibrosis.

The designation is meant to help speed better therapies for life-threatening diseases to market. Its implications for Vertex’s drug development “cannot be determined at this time,” the company said in a Jan. 6 statement.

“It should have potential upside,” Leiden said in the interview. “It’s an opportunity to have a different set of interactions and collaborative discussions” with regulators.

As the company tightens its drug development focus, it will consider doing deals to bring in new assets, Leiden said.

“Our priority is to develop our medicines,” he said. “If we see appropriately priced deals, we’d consider them; those usually end in ’millions,’ not ’billions.’”

Vertex fell less than 1 percent to $48.25 at the close of New York trading. The shares have increased 35 percent in the past 12 months.

To contact the reporter on this story: Meg Tirrell in New York at mtirrell@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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