Jeff Leiden, who helped steer Vertex Pharmaceuticals out of a crisis and into a profitable developer of cystic fibrosis medicines, will step down as the CEO of the Boston company next spring.
In a surprising announcement, Vertex (NASDAQ: VRTX) said Thursday morning that Leiden (pictured), who has run the company for about seven years, will transition to executive chairman effective April 1, 2020. At that point, chief medical officer Reshma Kewalramani will take over as president and CEO. Leiden has committed to remain executive chairman through the first quarter of 2023.
“It’s hard to say much with conviction on [Leiden’s] move…other than it’s (1) a surprise but (2) it’s encouraging that he’s still very much involved with Vertex,” wrote Stifel analyst Paul Matteis.
Matteis viewed it “positively” that Leiden will be succeeded by an R&D leader within Vertex. The choice “stays true to the company’s roots as a science-driven organization,” he wrote. Kewalramani joined Vertex in February 2017 and oversees the firm’s clinical development, medical affairs, and more.
Vertex shares ticked down about 2 percent in early trading Thursday.
Leiden, a longtime Abbott Laboratories executive, was named CEO of Vertex in December 2011, replacing Matt Emmens. He took over when Vertex was on the precipice of a crisis. Vertex had just won FDA approval of the injectable hepatitis C medicine telaprevir (Incivek) in May 2011, and the drug skyrocketed to $951 million in sales in six months, one of the most lucrative drug launches ever. It seemed the dawn of profitability for Vertex, which had lost money for decades, but fast-moving competition squashed those plans.
By 2013, Vertex began waving the white flag as it became clear a new wave of oral treatments for hep C, 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.
“It was absolutely a neck snapping phenomenon,” Leiden told Xconomy in 2016.
But it wasn’t fatal for Vertex, thanks to a burgeoning cystic fibrosis franchise. As Xconomy detailed in 2016, a combination of foresight, luck, and no small amount of help from the nonprofit Cystic Fibrosis Foundation put Vertex in position to stay afloat. It has used a multi-pronged strategy to develop a franchise of medicines in CF, defend its turf, and diversify.
The firm won FDA approval in 2012 of ivacaftor (Kalydeco), the first drug to treat underlying genetic abnormalities present in a small percentage of cystic fibrosis patients. It has followed with approvals of similar, two-drug regimens—Orkambi and Symdeko—that have broadened its reach.
Vertex’s cystic fibrosis franchise generated $3.04 billion in 2018 and is still rising annually. Vertex this week filed for an FDA review of a three-drug medicine that, if approved, could treat up to 90 percent of patients with the disease. Its shares have climbed to all-time highs over the past year as potential rivals have had a tough time matching its results. The company posted $1.55 billion in net income last year.
But Leiden has also been trying to lessen Vertex’s dependence on its CF franchise by targeting “transformative medicines for serious specialty diseases,” as he previously told Xconomy. Vertex is trying to focus on areas where it has a good understanding of the biology underlying the disease, and hoping that a strong signal from small, early studies will lead to “rapid development timelines,” he said on a recent conference call. It’s also dabbling in new cutting-edge technologies like CRISPR gene editing and messenger RNA therapeutics.
Whether that plan will work remains to be seen. Vertex has several drug candidates in development for pain, the blood diseases sickle cell disease and beta-thalassemia, the rare disease alpha-1 antitrypsin deficiency, and a genetic form of kidney disease. None are in late-stage testing as of yet.
“It has been a tremendous privilege to lead Vertex and our outstanding senior leadership team since 2012. I look forward to playing a continued, active role in the company over the next several years, and supporting Reshma and our team through this transition,” Leiden said in a statement.