Vertex Deals Cancer Drugs to Merck KGaA for $230M, Following Plan

Xconomy Boston — 

[Updated 1/23/17, 3:17 p.m. See below.] Vertex Pharmaceuticals is unloading a group of ancillary research programs in its portfolio, announcing today it will out-license the potential cancer treatments to Darmstadt, Germany-based Merck KGaA.

Merck KGaA is paying Boston-based Vertex $230 million up front for the drug candidates, which include experimental clinical-stage cancer therapies that target DNA damage and repair, as well as other preclinical immuno-oncology treatments. The deal also includes potential royalty payments on future net sales, and Merck KGaA is assuming full research and development responsibility, Vertex (NASDAQ: VRTX) said in a news release. [Headline has been changed to clarify that the deal was with Merck KGaA, Darmstadt, Germany, not Merck. The company’s full name is Merck KGaA, Darmstadt, Germany, which Xconomy refers to as Merck KGaA throughout this article and in the headline.]

Two of the research programs in the clinic aim to inhibit pathways that repair DNA, specifically ones that help certain types of cancer survive and proliferate, Vertex said. The compounds are being studied across various Phase 1 and Phase 2 trials, with one known as VX-970 being the furthest along. A protein kinase inhibitor, VX-970 showed some promise in a Phase 1 trial, though Vertex has been relying on academic collaborations to push the research on it forward, according to analysts at Jefferies.

Getting money for the various cancer compounds will let the company invest in work that is more related to its core focus, such as cystic fibrosis (CF), the Jefferies analysts wrote in a note this morning. It also brings to fruition something Vertex CEO Jeff Leiden told Xconomy last year: The company might sell the cancer drugs if they show promise.

The origin of the deal can partly be traced back to Vertex’s previous work in hepatitis C, as Xconomy previously reported in an in-depth look at the company in October. Over the course of just three years, Vertex went from having a billion-dollar hepatitis C business with its treatment telaprevir (Incivek) to abandoning the research completely, mostly due to the emergence of more effective treatments, including Gilead Sciences’ sofosbuvir (Sovaldi).

Since then, Vertex has emerged as a leader in CF, a deadly disease caused by mucus that clogs the lungs. Vertex’s ivacaftor (Kalydeco) was the first drug to directly address the molecular malfunction that underlies the disease, and the company followed that with a combination drug three years later. The company has also taken an interest in developing treatments for rare disorders, in part due to the hiring of David Altshuler to lead its research and development operations.

Vertex, however, still has a pipeline of other drugs, from cancer to pain treatments, outside of that newer core focus. The Merck KGaA deal appears to track with Leiden’s plan to get Vertex cash for some of those assets.

Merck KGaA “will help fully realize the value of these unique compounds and accelerate the programs’ potential benefits for patients,” Leiden said in today’s news release.