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After “Hubris” and Its HCV Collapse, Can Vertex Avoid Same Mistakes?

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more nuanced. Emmens, who could not be reached for comment, was supportive of making deals to protect Vertex’s HCV future, but wanted to “balance that with the longer term needs of the company,” she says. At the time, Vertex was developing drugs for CF, flu, rheumatoid arthritis, and other diseases, and it only had a certain amount of capital to work with. Still, Vertex had other HCV drugs in development, and was meeting with and having discussions with “every company” in the HCV sector. It wasn’t clear at the time who the winner would be, according to Wysenski.

While missing out on Pharmasset changed the course of Vertex, Emmens’ reasoning has since proved prescient. Emmens told Werth in 2011, before the Pharmasset/Gilead deal, that he was wary of HCV as a long-term business: “I’m not so sure I want to be in this market in 2017, to any great extent. I don’t want to depend on it, because gradually you get chopped away. Even if we’re the market leader, these guys come in, you ain’t going up, you’re going down.”

It’s not even 2017 yet, and Gilead is already seeing this happen. It was a Wall Street darling when its $11 billion Pharmasset deal yielded sofosbuvir and follow-on drug sofosbuvir-ledipasvir (Harvoni), which produced the most successful drug launches ever and a remarkable $50 billion in cash and other assets. But sales and Gilead’s share price have begun to decline, and frustrated investors and analysts want another big buyout to turn things around. “Put simply, [HCV] is turning out to be a ‘flash in the pan’ market,” Leerink Partners’ Geoffrey Porges recently wrote in a research note.

Vertex, in the meantime, has decided to branch out into other diseases, with a famous geneticist helping to navigate. Vertex in 2015 hired David Altshuler as its R&D chief. Altshuler is a founding member of the non-profit Broad Institute of Harvard and MIT and helped drive genetics initiatives such as the 1000 Genomes Project, an international effort that began in 2008 to catalogue the DNA of a thousand people.

Leiden wants Vertex to make “transformative medicines for serious specialty diseases,” which in the drug business often means products for rare disorders that sell for a high price and don’t require a big sales force. (Vertex has about 20 salespeople in the U.S.)

From the outside, though, it seems the strategy hasn’t taken full effect. The firm’s pipeline looks a bit like a grab-bag of different drugs for cancer, pain, and spinal cord injury, among others, some of which don’t seem to be good fits.

Oncology, in particular, can require big expensive trials and a large sales force; Leiden says the company might sell off its cancer drugs if they show early promise.

David Altshuler

Meanwhile, Altshuler (pictured above) wants to build out a pipeline of drugs for rare diseases that are caused by easily identifiable genetic mutations. A few are already in preclinical development. One aims to treat alpha 1 antitrypsin deficiency, which causes liver and lung damage; another is for adrenoleukodystrophy, which causes brain damage.

The company has also made bets on unproven drug-making methods such as gene editing and messenger RNA therapies, via its collaborations with CRISPR Therapeutics and Moderna.

“We’re in this really wonderful middle ground” between a small and large company, Altshuler says. “We’re nimble enough that there’s a chance for the company to pivot to what the future might be.”

Vertex managers are exploring other ways to be “nimble”—or as nimble as a firm can be with two towers, state-of-the-art facilities, and an auditorium that can fit hundreds of people. A proposal from longtime research scientist Patrick Connelly to work on genetic heart disease led to an internal program that allows anyone to pitch ideas.

Connelly, who feared the effects of moving into shiny new facilities—“we started to ask ourselves how this was going to change us”—came up with the pitch program, which has the rather un-nimble name of Vertex Opportunities for ‘Intrapreneurship’ and Corporate Evolution, or VOICE.

At the inaugural VOICE competition in 2015, 33 teams of employees made short presentations in front of the whole company at a happy hour gathering. Vertex picked a few winners and funded the ideas. One pitch, for example, came from Setu Roday, a senior scientist in Vertex’s materials discovery department.

Roday’s brother died of the blood disease beta-thalassemia when Setu was young. He argued that Vertex should get into hemoglobinopathies—blood diseases like beta-thalassemia or sickle cell disease. “It influenced where we went,” Connelly says. “The company was not looking at this at all.”

Roday is now involved in the collaboration with CRISPR Therapeutics. The first program from that deal, a gene editing product for an unspecified hemoglobinopathy, could begin clinical testing next year, according to CRISPR’s recent IPO prospectus. Two other programs pitched by employees have received an investment, though Connelly wouldn’t provide specifics.

Vertex is also kicking around the idea of funding academics and giving them free lab space in the Vertex towers to incubate their own companies.

In-house incubators are no guarantee of tapping into innovation; many big drug firms have created them, and some like Pfizer and Biogen have reversed course and scrapped them. But Vertex is trying many ways to learn from the past and prepare contingency plans. Could it end up becoming a completely different company?

“You can’t be complacent, you can’t stop,” Leiden says, “because innovation is going on around you relentlessly.”

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