Vertex May Receive up to $800 Million
From Novartis Drug-Development Pact
By JOHN HECHINGER
Staff Reporter of THE WALL STREET JOURNAL
Vertex Pharmaceuticals Inc. said it could receive $800 million over eight years from Swiss drug company Novartis AG to develop eight drugs based on research that targets a class of human proteins.
The deal focuses on protein kinases, enzymes that have broad-ranging functions in the body and appear to be involved in diseases ranging from cancer to arthritis. "You name it," Joshua Boger, Vertex's chief executive, said of diseases the two companies hope to treat.
Scientists have discovered 500 protein kinases. But Vertex, of Cambridge, Mass., said that researchers could find twice that figure as part of the sequencing of the genome -- the effort to identify human genes.
Under the deal, Novartis will provide Vertex with a $15 million initial payment, along with $200 million in research funding over six years. Novartis will then have rights to develop, manufacture and market potential drugs that Vertex develops.
Dr. Boger said the financial projections in the deal assume that Vertex would develop eight potential drugs. He called that figure "conservative."
If Novartis chooses to develop the drugs, Vertex could then receive license fees, milestone payments and expense reimbursements of as much as $600 million. If the drugs are marketed, Vertex said it would reap "double digit" royalties, as a percentage of sales, under the agreement. Dr. Boger said he couldn't be more specific.
In Nasdaq Stock Market trading at 4 p.m., Vertex shares closed at $63.4375, down $1.625. Analysts blamed a sell-off of many biotech shares and said some speculators had already expected a deal.
Vertex Pharmaceuticals, with $61.6 million in revenue last year, has one approved product, Agenerase, a protease inhibitor used to fight the AIDS virus and marketed by Glaxo Wellcome PLC. With eight other potential drugs under development, Vertex is also developing an arthritis drug, based on protein kinases. This research isn't covered by the Novartis agreement.
Analysts said the Novartis deal gives Vertex cash it needs to develop potentially lucrative products. The deal also provides Novartis with a potential pipeline of new drugs.
David Molowa, an analyst with Bear, Stearns & Co. in New York, said it was noteworthy that Novartis agreed to provide that much money without forcing Vertex to give it a chunk of equity. "Novartis clearly believes there is a lot of value in what Vertex has," he said. "They're willing to pay out a lot for it."
Write to John Hechinger at john.hechinger@wsj.com
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Alot of money. Not sure of the history of Vertex.
Jack |
