AbbVie has just reworked a long-running deal with partner Galapagos NV, paying $45 million up front—a small sum for the pharmaceutical giant—to gain rights to all of the Belgian company’s experimental cystic fibrosis drugs.
The deal changes the competitive landscape for cystic fibrosis, a field currently dominated by Boston-based Vertex Pharmaceuticals (NASDAQ: VRTX). AbbVie (NYSE: ABBV) will now lead an effort to challenge Vertex and develop combination treatments for the debilitating lung disease, rather than splitting the costs with Galapagos (NASDAQ: GLPG). Galapagos could get $200 million in total milestones as well as royalty payments if the drugs in the deal ever reach the market.
The move is a surprise given it was delivered in tandem with data released by Galapagos that Wall Street analysts considered disappointing. In a study called Falcon, a two-drug regimen of Galapagos drugs GLPG2451 and GLPG2222 led to an average roughly 3 percent increase in a measure of lung function after two weeks of treatment. Adding a third drug on top of that regimen, GLPG 2737, didn’t boost the results. The results were “underwhelming,” wrote Stifel analyst Paul Matteis.
That disclosure was important because Galapagos is one of the companies trying to challenge Vertex, which has remade itself into the CF market leader over the past several years after its hepatitis C franchise was wiped out. Since 2012, the company has won FDA approval of three drugs: ivacaftor (Kalydeco), ivacaftor/lumacaftor (Orkambi), and ivacaftor/tezacaftor (Symdeko). Known as CFTR modulators, they are the first approved drugs to treat the molecular malfunction underlying the disease, which causes a steady buildup of thick mucus in the lungs and pancreas that leads to infections and other health problems.
These drugs aren’t cures, but they help improve lung in segments of the CF population. Vertex has been developing a variety of multi-drug cocktails to treat a wider swath of patients—and dominate the CF landscape. It currently has two three-drug regimens in late stage testing, for instance, that, if effective, could help treat up to 90 percent of people with the disease.
AbbVie and Galapagos have been among the companies trying to challenge Vertex by testing their own two and three drug cocktails. Proteostasis Therapeutics (NASDAQ: PTI) is another. Serious near-term threats have yet to emerge. But Proteostasis saw its shares skyrocket last week on early results from an in-house two-drug combo that could “potentially be better than” Orkambi and Symdeko if the results hold up in further testing, Leerink’s Joseph Schwartz recently wrote. Proteostasis is also developing a three-drug regimen, with results from an early stage study expected later this year.
Vertex’s CF business, meanwhile, kept humming along. The Boston company reported $784 million in total quarterly revenue on Wednesday from its three CF drugs, a roughly 40 percent jump from the prior year. And both Phase 3 studies of its three-drug regimens should produce data by early next year. Vertex plans to pick the better of the two and file for FDA approval.
There were a few developments Wednesday, meanwhile, regarding Vertex’s plan to protect itself from the CF competition by, in part, branching out into other diseases. One drug the company had licensed from BioAxone Biosciences in 2014 for spinal cord injury failed a Phase 2 trial, and won’t be developed further. But human data on medicines for pain, the rare genetic disease alpha-1 antitrypsin deficiency, and a gene editing treatment for sickle cell disease and beta-thalassemia could come next year.