How Eli Lilly Let a Billion-Dollar Molecule Slip Away and Make a Fortune for Vertex

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involved in the collaboration,” says Roger Tung, a founding scientist of Vertex who supervised the group that worked with Lilly researchers on telaprevir. He is now founder and CEO of Lexington, MA-based Concert Pharmaceuticals. “Lilly was very involved, they did a lot of work, and they contributed substantially to the science.”

In hindsight, there’s a lot to be gleaned today from Lilly’s decision to end its work on telaprevir—and Vertex’s moxie to advance the drug into initial clinical trials several years ago on its own and without the backing of a major pharma player. Two former Vertex executives, who were once intimately involved in the firm’s collaboration with Lilly, biotech investor Rich Aldrich and Concert’s Tung, shared their perspectives on the deal that, fortunately for Vertex, fell apart.

At Vertex, the research budget relied heavily on contributions from its large pharma collaborators such as Lilly, GlaxoSmithKline (NYSE:GSK), and Sanofi-Aventis (NYSE:SNY). “We did a lot of deals while I was [at Vertex],” says Aldrich, the former chief business officer of Vertex who led its initial deal with Lilly. “The Lilly deal was an important one.”

Rich Aldrich, founding executive of Vertex.

Rich Aldrich, a founding executive of Vertex.

During the collaboration, Lilly paid Vertex at least tens of millions of dollars in initial and annual fees and contributed its own scientists’ efforts to advance research of hepatitis C virus. The virus, which causes chronic damage to the liver, affects an estimated 170 million people worldwide and 3 million Americans. Existing drugs for the disease cause flu-like symptoms and patients must typically take them for nearly at year.

However, changes at both Lilly and Vertex led to the two firms’ “mutual decision” to part ways in late 2002. Officially, Lilly wanted out of its partnership with Vertex because of changes in its research priorities, and Vertex wanted to retain greater ownership of the drug than it would have if it kept Lilly as a partner, according to a Vertex regulatory filing.

Unofficially, there was more to the breakup than that. … Next Page »

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3 responses to “How Eli Lilly Let a Billion-Dollar Molecule Slip Away and Make a Fortune for Vertex”

  1. I cannot wait until this medicine comes out! I am excited and you have given me HOPE that I might actually defeat Hep-C that has been killing me for years.

  2. Stephen Randolph says:

    It’s about time!!! I wish the fda would get off their butts and get this drug going. I have had hep c since 1984 and it is a lot of fun having it. Mr doctor tells me 06/11 it will be available but that is not soon enough for me. Let me try it now before any further damage is done. What is the worst thing that could happen to me…..the drug does not work so I think I should be the option to take it now or not.