Vertex Pharmaceuticals is a pillar of Boston biotech. A pioneer of treatments for hepatitis C and more recently, cystic fibrosis, the Boston-based company today is worth more than $27 billion. It’s also going through a transformation—one that may leave the company with a completely different identity a few years from now.
Most attention on Vertex (NASDAQ: VRTX) focuses on cystic fibrosis (CF), and for good reason. The firm developed the first drug to treat underlying genetic abnormalities present in about four percent of all CF patients (just over 3,000 worldwide). For those patients, at least, there is now hope of a normal life instead of a steady buildup of thick mucus in the lungs that can lead to various health problems and often, an early death.
Behind that drug, called ivacaftor (Kalydeco), Vertex has two others that might bring the same transformation to thousands more CF patients.
A couple years ago, Vertex thought it had a second major business, in hepatitis C, to build upon. It disappeared quickly, and now, to help rebuild around its CF franchise, Vertex is betting on a drug that has been brought back from the dead—and that Vertex has kept under wraps since it bought the rights last October.
The drug in question, a treatment to repair spinal cord injury, is now Vertex’s most advanced drug outside of CF. It comes from BioAxone Biosciences, a tiny biotech that Vertex quietly obtained an option to buy late last year. Originally called Cethrin and now VX-210, it’s a roughly 15-year-old drug that was kicked to the curb during the financial crisis and later resuscitated by the neuroscientist who helped discover it.
Vertex first made mention of it in its annual report released last week.
Vertex only paid Cambridge-based BioAxone $10 million up front and could pay $90 million in the future as it moves VX-210 into Phase 2b testing later this year. But there are also triggers to allow Vertex to buy BioAxone outright.
Vertex had almost $1.4 billion in cash on hand at the end of 2014, thanks in large part to ivacaftor, which generated $463 million in sales last year. So the layout for VX-210 is peanuts, a low financial risk on what Vertex spokesman Zach Barber called a “high-risk” yet “potentially transformative” treatment for people with “very few, if any, other treatment options.”
A spinal cord injury drug might seem out of left field; RBC Capital Markets analyst Michael Yee called it an “off-the-radar” deal in a recent research note. But Barber said it fits with development work Vertex has been doing in-house “across multiple neurological diseases.”
Indeed, as noted in its regulatory filings the past several years, Vertex has worked on programs in neurology, autoimmune diseases, and oncology, among other fields. Some of those efforts: a rheumatoid arthritis drug, VX-509, that Barber says the company is no longer actively developing; a flu treatment, VX-787, licensed to Janssen Pharmaceuticals last year; and work in multiple sclerosis, epilepsy, and Huntington’s disease. In its latest earnings release, Vertex revealed two cancer drugs in Phase 1 testing.
But nothing has matched the scale of its hepatitis C program. In the blink of an eye, Vertex went from king of the hill in hep C to an afterthought. The FDA approved its protease inhibitor telaprevir (Incivek) in 2011, and the drug skyrocketed to $951 million in sales in six months, one of the most lucrative drug launches ever. But by 2013, Vertex began waving the white flag as it became clear a new wave of oral treatments, led by Gilead Sciences (NASDAQ: GILD) and its sofosbuvir (Sovaldi), were the future. Vertex said it would get out of the hep C business entirely in 2014.
Discussing 2014 results on a conference call recently, CEO Jeff Leiden (pictured above) sidestepped questions about specialties and simply called Vertex a “transformational medicines” company. At the J.P. Morgan Healthcare Conference in January, Leiden said he expected “multiple new compounds” in cancer and neurodegenerative disease in trials this year.
There was no mention in either instance of the spinal cord injury treatment.
Several therapies for spinal cord injury were in development a decade ago, from RNA interference-based approaches (Alnylam Pharmaceuticals) to blocking specific proteins with drugs (Biogen Idec, Novartis), to refashioning cancer drugs (Genentech) to cell-based methods (Geron). None have led to a product as of yet.
According to the National Spinal Cord Injury Statistical Center at the University of Alabama in Birmingham, about 12,500 people in the U.S. suffer from acute spinal cord injuries each year, from things like car or sports accidents, falls, and gunshot wounds.
VX-210 came out of the research of Lisa McKerracher, who worked in the 1990s as a postdoc at McGill University in Montreal with neurologist Albert Aguayo. Aguayo discovered that neurons in the central nervous system (the brain and spinal cord) can regenerate after being damaged, just like the nerves outside the CNS can. McKerracher wanted to know why. The theory was that a group of proteins blocked these cells from repairing themselves; stymie the activity of those proteins, and perhaps the nerves would grow back.
McKerracher’s group homed in on a signaling molecule called rho. She describes it as the “mastermind switch” that regulates the growth and regeneration of injured axons—the long thin nerve fibers that shoot electrical impulses out of a neuron. When CNS trauma occurs, she says, rho is “hyperactivated,” and various growth-inhibitory proteins stop axons from regrowing. McKerracher and her group developed a molecule—a modified version of the enzyme c3 transferase—to block rho and, in the process, all the proteins it controls, which hopefully will let new nerve fibers form.
McKerracher believes her master switch approach can work. Others have failed she says, because they have tried to knock out a single protein (Nogo, for instance), which leaves other inhibitory proteins in place.
Several companies today, such as StemCells Inc., Asterias Biotherapeutics (which has Geron’s old program), and Neuralstem, are working with stem cells as the therapy. McKerracher contends there are open questions to that approach, like when to actually deliver the cells. They can’t be given right after injury, for instance, because the immune system would kill them during the body’s inflammatory response to trauma.
“Plus a drug that’s sold in a bottle and can be available in every single trauma center to every single American is very different than an extremely expensive therapy that requires a special surgery to apply it,” she says.
McKerracher has been working on her rho-inhibiting drug since 2000, when she raised $12 million (Canadian dollars) to form the first incarnation of her company. In a trial that wrapped up in 2008, there were signs Cethrin was helping a small group of patients with spinal cord injuries recover some motor function.
But no work has been done since. BioAxone licensed Cethrin to Boston Life Sciences (later known as Alseres Pharmaceuticals) in 2007, and the financial crisis struck. Alseres focused elsewhere, and Cethrin was left behind. Regulatory filings from Alseres in 2009 show a dispute between the two companies about the drug’s progress.
“I decided I wanted to do something about it,” she says. “Quite frankly after so many years working in regenerative neuroscience, I still really deeply believe that Cethrin is the most promising drug to treat spinal cord injury.”
McKerracher cut a deal for the IP in 2011 (she declined to be more specific) and salvaged the drug. She founded a new company in Cambridge with a similar name, BioAxone Biosciences, and spent years trying to find a partner to take Cethrin forward. She says she wanted the right partner, and a deal with enough cash to let her develop other drugs dealing with nerve cell regeneration.
It’s now been seven years since Cethrin’s last trial and five since the new BioAxone was started.
“Five years seems odd to me,” Yee said via e-mail.
“These deals take a lot of time, and they take all of your energy,” McKerracher says. “When you have a small group and they’re working on a deal, that’s what gets done.” McKerracher and an individual she declined to name are BioAxone’s only investors.
Barber says Vertex didn’t make an announcement because “formulation work and regulatory discussions have been ongoing” since the deal was struck, and it “wanted to communicate about the VX-210 program when we had further clarity on the development program and next steps.”
Vertex expects to provide those details when it starts the next trial of the drug later this year, he says.