Rearranging the Corporate DNA

On the verge of its first blockbuster drug, can Vertex transform itself into a money-making enterprise?

By Robert Weisman
Globe Staff / April 24, 2011

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CAMBRIDGE — This week, a Food and Drug Administration advisory panel in Silver Spring, Md., is scheduled to make a recommendation critical to the future of Vertex Pharmaceuticals Inc. The advisers will rule on whether the FDA should approve the first drug developed solely by the biotechnology company in its 22 years of existence.

Approval for telaprevir — a drug aimed at curing hepatitis C — would hasten Vertex’s transition from a research and development company that invested some $4 billion in drug discovery over the past two decades to an integrated research and commercial organization. It also would become, for the first time, a company that consistently makes money.

“Vertex’s plan has always been to be a fully capable company, and that’s still the plan,’’ said Joshua Boger, who founded the biotech company in 1989 and retired two years ago. “This is the fulfillment of that aspiration.’’

In a warren of former industrial buildings in Cambridgeport that make up the Vertex corporate campus, the company’s transition is well underway. Chief executive Matthew Emmens, the biotechnology veteran tapped in 2009 to create a sales and marketing force, has hired more than 200 people for Vertex’s fledgling commercial team.

Overall, the company now has about 1,800 employees, 25 percent more than at the start of last year. That includes about 1,200 in the Boston area and 175 field representatives preparing to promote telaprevir — which will be given a more consumer-friendly brand name — if it wins final FDA approval in May.

Vertex is still hiring and currently has 150 job openings. In February, it unveiled plans to add 500 more employees and build a new headquarters in the Fan Pier waterfront development area in South Boston. That move, which includes $60 million in incentives from the state, is contingent on approval of telaprevir. Vertex also is moving forward with clinical trials of a drug to treat cystic fibrosis.

“It’s just a golden era right now for this company,’’ said Emmens, 59, former chief executive of British drug maker Shire PLC, who worked with Boger years ago at pharmaceutical giant Merck & Co. in New Jersey. “Some of the best researchers in the world are here, and we’re building a commercial presence. You’ve got millions of patients waiting for a drug that can save their life.’’

Vertex’s market value has climbed to $9.8 billion, second only to Weston-based Biogen Idec Inc. among Massachusetts biotechnology companies, largely on investor anticipation of its new drug that, if approved, would enter a market projected at $3.3 billion a year starting in 2012.

But it might not have that market to itself. The day before the FDA advisory committee takes up telaprevir on Thursday, it will consider a competing hepatitis C virus treatment from Merck. Both are protease inhibitors, a class of drugs that act to prevent viral infections. They target a US population that includes hundreds of thousands of patients treated unsuccessfully by current drugs and tens of thousands “warehoused’’ by doctors — patients infected with hepatitis C but not yet experiencing symptoms — until the Vertex and Merck drugs are available.

“We’re expecting it to be a very big market initially,’’ said biotechnology analyst Howard Liang, managing director at health care investment bank Leerink Swann in Boston, who projects the new hepatitis C treatments will generate $2.2 billion in revenue for Vertex and $1 billion for Merck in 2012, and even more the following year. “Both drugs are a very significant advance over existing therapies.’’

Hepatitis C is believed to kill about 10,000 people a year worldwide, many of whom develop cancer or scarring of the liver. But the virus can be carried for decades before patients become sick, and millions of people are thought to have the virus and not know it. The virus has become an epidemic among baby boomers infected decades ago through injecting drugs or blood transfusions. It may be carried by as many as 3 million people in the United States and 100 million worldwide.

Patients are currently treated with a combination of two drugs: pegylated interferon and ribaviran. Vertex’s telaprevir or Merck’s drug, known as boceprevir, would be added to that “cocktail,’’ boosting its potency and acting directly against the virus in a bid to cure many patients. The drugs are expected to be priced at between $35,000 and $40,000 per patient, Leerink Swann estimates, and taken in combination with the current drugs, they promise to shorten the duration of treatment for large numbers of patients.

Telaprevir, in particular, aims to cut the treatment time in half, from 12 to six months, for about 60 percent of patients with the most serious form of the virus, Leerink’s Liang said. “Our opinion is, telaprevir looks to be a more potent drug,’’ he said. “The cure rate is a little higher, and it’s more likely the duration of treatment will be reduced.’’

But Merck would have some advantages in marketing boceprevir, which it says it would sell under the name Victrelis. Among them, it is likely to market the drug together with its own brands of pegylated interferon and ribaviran, both already on the market. “We would take a franchise approach to this,’’ said Mark Timney, president of Merck’s US Human Health business. “We have a long history and deep scientific and commercial knowledge in treatment of the hepatitis C virus.’’

For Vertex, the challenge would be not only developing the superior product, but selling it to doctors, such as gastroenterologists and hepatologists, with a new sales force. Boger, a scientist, turned over the Vertex management reins to Emmens, an organizational specialist, specifically to build up the commercial side of the business.

“What we did here is we actually had the R&D people interview the people we brought in on the commercial side,’’ Emmens said. “That was one of my ideas, simply because I thought I didn’t want to have an adverse reaction . . . let’s put it that way.’’

If it succeeds, Vertex will become a more prominent player in the Boston area life sciences scene, especially following the recent acquisition of Genzyme Corp. — long the largest biotech in the state — by French drug giant Sanofi-Aventis SA.

“Nature will take its course,’’ Boger said. “As we become a larger company and we shift from a company that consumes capital to a company that creates capital, our footprint will grow.’’

Robert Weisman can be reached at