Read The Antidote: Inside the World of New Pharma Online

Authors: Barry Werth

Tags: #Biography & Autobiography, #Business & Economics, #Nonfiction, #Retail, #Vertex

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BOOK: The Antidote: Inside the World of New Pharma
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The other thing we said is, “We don’t know which kinases to work on. There aren’t that many mouse knockouts in the kinase family. There’s not a lot of good cell assays. The biology is very primitive.” So you have to be ready when you open your copy of
Nature
or
Science
each week, if there’s a paper that says kinase X is implicated in rheumatoid arthritis, that you don’t need to start from scratch. You want to say, “Aha, I don’t have a crystal structure for kinase X, but I do have a crystal structure for kinase Z, which is very similar to X, so that gives me information right out of the chute. Then I’ve got compounds that inhibit kinase W, and that’s pretty close to kinase X, so I have a good chance that right in my screening deck I’ve got molecules that will hit kinase X.” Instead of wasting a year doing the cloning, doing the expression, the purification, setting up the assays, you could instantly go to town and set up a starting point. You’ve got a compound—a tool compound—to help you convince yourself that, really, the
Nature
paper is correct, and kinase X really
is implicated in rheumatoid arthritis, without having to go through years of discovery.

Boger was mesmerized by the possibilities. Here was the next rational step beyond structure-based discovery—indeed, a platform for the next stage in the evolution of small-molecule drugs. By positioning Vertex as the company best informed and organized to take the explosion in genetic knowledge and apply it to discovering and understanding new drug targets, Boger staked its future on a new paradigm, wedding genomics to medicinal chemistry. As the dot-com boom on Wall Street climaxed, Celera, Millennium, Human Genome Sciences, and other gene sequencing stocks were swept up in the speculative frenzy. They were the biomedical cousins to e-commerce prototypes Amazon, Priceline.com, eBay, and Webvan, which in July set a new standard for irrational exuberance by raking in $275 million in an initial stock offering with little more than a business plan and some marketing research for a national chain of online grocery stores. Dr. Francis Collins, head of the international genome consortium, issued bold claims about how illnesses would be treated in the postgenomic age: clinicians would subclassify diseases by the genetics of individual patients and adapt therapies to suit them; gene-based designer drugs for diabetes, hypertension, mental illness, and many other conditions would follow suit.

“We saw this bubble come up with the hysteria around the human genome sequencing, and I said, ‘We’ve got to be part of this,’ ” Boger recalls. “Remember, I’m desperate to get more projects going.” Vertex had been considering for years whether there was another way to configure its research, as an alternative to traditional disease-oriented biology, the industry standard. Boger recognized that at some point you have to integrate with disease, but the next step past atom-by-atom design wasn’t tackling cancer. Committing the company to a major effort in scaling the success of VX-745 across the kinase spectrum, he decided that an organizing principle that
might
be close enough to the molecular level to be useful would be: “I’m gonna design drugs against certain kinds of targets, and I’m gonna be expert at designing drugs against those kinds
of targets. And the targets would be defined not by the disease but by their structural similarity.”

On the eve of the new millennium, Vertex recast its core strategy around targeting gene families, what Sato and Murcko, in preparation for a pitch meeting, decided to name
chemogenomics
. Boger imagined now vaulting in leaps—one target family after another—toward his goal of self-sustaining, fully integrated, commercialized drug discovery and development. On Wednesday mornings, he, Aldrich, and Sato huddled over bagels to hash out plans. By industrializing new target identification and screening, chemogenomics would require Vertex to rapidly “blow out” its research efforts in every direction, giving Sato control over what would become an ever-expanding share of the company’s resources. Aldrich, meanwhile, started to devise the ways to pay for it, recognizing that the chief risk in scaling up so rapidly was that Vertex would become hostage to a rocketing burn rate, leaving it disproportionately dependent on whatever company financed it—takeover bait, in other words.

Once Agenerase received approval, Boger jumped the list of biotech CEOs who could claim to have brought a drug out of the lab. In pharmaceuticals, past performance can indeed be an indication of future rewards, and Vertex was a far more credible investment opportunity than, say, Millennium, which a year earlier had secured more than $1 billion in potential partnership financing based on an agreement with Bayer to identify, using little more than gene sequencing, 225 targets for new drugs for cardiovascular disease, cancer, osteoporosis, pain, liver fibrosis, blood disorders, and viral infections. Boger thought he would need about that much money to launch chemogenomics and that he ought to have little trouble finding it as long as the delusions and self-deceptions of the genomics boom didn’t cause it to implode first.

He began to talk with an attractive suitor. Dr. Daniel Vasella was chairman and CEO of Swiss pharmaceutical giant Novartis, Europe’s third-largest drugmaker. Since July, the company had basked in the presumptive success of a new cancer drug that inhibited a kinase and that, based on recently released data from a Phase I clinical trial, promised to transform the lives of patients and, indeed, the treatment of cancer itself.
The compound, which later would be marketed as Gleevec, was given at high doses to fifty-four patients with a deadly blood cancer, chronic myeloid leukemia; fifty-three showed complete response within days of beginning treatment and remained deep in remission. Demonstrating for the first time that highly specific, nontoxic cancer therapy was possible, Novartis’s success opened the floodgates of competition, and Vasella was determined to defend—and extend—the company’s position. Novartis, based in Basel, was also a market leader in asthma and diabetes.

On a visit to Cambridge, where Novartis was building a new research site in an MIT-sponsored technology park down the street, Vasella sought out Boger. “He called me to talk about . . .
life
,” Boger says. “He wanted to buy the company, but he never made an offer, because unlike buying a company with products, he knew that there’s no such thing as a hostile takeover of a creative group. That doesn’t work. You can’t do a hostile takeover of talent. He knew he had to woo us. I didn’t see what was in it for us to be taken over. It was sort of uncharacteristic of Dan, because he’s a pretty aggressive guy, but he listened to that.”

Boger sketched out Vertex’s vision of chemogenomics. Vasella quickly saw a potential for Novartis. They agreed to “do something big together,” Boger says. “In the background of this, Rich and I were both very aware that any big deal like this ended up being a takeover in the end. They were just gonna be such a big part of what we did. And I think that’s what Dan was thinking as well: ‘Okay, fine, you don’t want to be taken over? I’ll just build you a big house, and you move into it.’ We realized we had to do this again, pretty soon: find another partnership with another family; otherwise we’d be captive of Novartis.”

In February 2000 a senior Novartis delegation arrived at the Fort Washington building, Vertex’s hive-like hub, to examine the company and consider what use they might make of its expertise. The all-day meeting started in the East-West conference room, the largest common space in the drafty, block-long, low-slung former trucking depot where labs and business offices jostled for space, sharing floors and hallways. For three hours, Boger, Sato, Aldrich, Murcko, and others gave presentations. “Our job,” Murcko says, “was to show them that we had thought it all through deeply.” Finally, the president of Novartis research, Dr. Argeris
“Jerry” Karabelas, declared his support for a deal. “Karabelas was behind us,” Murcko recalls. “He said, ‘This is great. This is what we need.’

“The problem was that also at this meeting was the worldwide head of discovery, who clearly was not happy about this. Essentially, the way we were pitching the deal was: ‘You guys, Novartis, you don’t have to worry about kinases. We’ll take care of it.’ Think about it. You’re a cancer researcher, you’re in Basel, maybe you’re humor deprived. And along comes Jerry Karabelas, president of Novartis R&D, and he says, ‘I have great news. We’re going to do this deal with Vertex, a little tiny company you’ve probably never heard of; they’re gonna do all the kinase discovery. We’re gonna shut down all of your kinase programs, and Vertex will do it for you.’ And we actually believed that this would work. We were banking—
banking
—on their discovery people partnering with us.”

With the deal prewired, preparations raced ahead. Karabelas agreed to pay for 165 Vertex scientists, but the company would have to find them and had no space to put them in. Cranes arrived on the flat parking lot where the scientists played roller hockey. Vertex built in three months, on spec, a four-story, 300,000-square-foot lab building—Fort Washington II— connected like an umbilicus to the main activity by an airwalk. Aldrich, asserting uncommon leverage, directed the negotiations, which at Novartis were handled at the highest level and run out of Vasella’s suite in Basel. Under the terms of the deal, Vertex would generate eight drug candidates targeting selected kinases. Novartis agreed to pay $15 million up front and $200 million in committed research funding over six years: cash, no BioBucks. It also pledged up to an additional $200 million in loans to pay for “proof of concept” clinical studies by Vertex, which along with aggregate license fee and milestone payments of $370 million brought the total to about $800 million—precisely the amount that the newest, most authoritative study calculated it took to make one new drug. When the agreement was announced in May 2000, Vertex’s share price shot to over $50.

Boger caught the wave on Wall Street just as it turned choppy and then crashed. In April investors got queasy. Amazon, eBay, and Yahoo! lost almost one-third of their value in a month. Dead dot-coms littered cities across America, signaling that the boom of the Clinton years was
ending. Yet investors remained intoxicated by siren songs of gene-based miracle drugs, and biotech stocks leapt higher for several more months. After Labor Day, Vertex raised an additional $500 million by selling convertible bonds, hybrid securities that let companies raise cash in return for a guarantee that holders can convert their bonds into stock at a later date for an agreed-upon price. The price was $92.26 per share. Aldrich could see that the current climate in biotech was unsustainable too and that capital would soon disappear. He was happy to complete the Novartis deal and the bond sales, which Vertex would need to fund several upcoming clinical trials, before the gate came down, but, as always, even in flush periods, fretted when the size of the wheel at Vertex got suddenly bigger. “I didn’t have any inside knowledge other than my general view that the market was insane,” Aldrich says. “I was antsy. NASDAQ was trading at two hundred fifty times earnings. The Internet thing was clearly off the tracks. Genomics was even more egregious in terms of the underlying economics.”

The company’s stock price spiked throughout the fall, almost doubling by Election Day, when it traded briefly over $100 before closing at $97. More than a few of the scientists and even some of the company’s lawyers had become avid day traders, and with the value of their Vertex options soaring, they scrambled to stay ahead of the bubble’s gyrations. Boger recognized that he, Aldrich, and Sato needed more executive help and a reporting structure that could translate the Novartis deal into an effective and productive drug hunt. He retained his title as CEO but relinquished the presidency to Sato. The Novartis deal had been all his, an expansion strategy so novel that he considered it “nearly proprietary,” and he assumed from here on that Vertex’s next collaborations in chemogenomics would copy it and likewise originate from the top. He asked Aldrich to remain chief business officer, reporting to Sato.

The national election hung in the balance, the country consumed by the Florida recount.
Bush v. Gore
groped toward a showdown in the Supreme Court as Washington grew bitter, paralytic. Another long, lightless Boston winter descended. Aldrich, after eleven years of eighty-to hundred-hour weeks, imagined selling most of his founder’s stock—worth now about $30 million—purchasing a yacht, hiring a crew, and
cruising the Caribbean. Grievously miffed, he doubted that Boger’s reorganization could work and considered it wrong, possibly lethal, for Vertex. By the end of the year, he was gone.

His reasons were both personal and practical. He had been with Vertex since the start, working and traveling side by side with Boger. “Josh is the accelerator,” he often said. “I’m the brake.” He felt that their relationship not only had been highly successful but also would become more and more crucial as Vertex grew. Without financial discipline and restraint, Boger’s visions and reality distortions contained real risks—for employees and investors, especially—far beyond just elevating false hopes and a perception of arrogance. Aldrich realized he couldn’t tolerate having a limited hand in running the firm in the future—a future that for the first time perhaps since the Searle threat now seemed to him seriously imperiled, not by an aggressive competitor but by a decision to double down on Boger’s scientific hubris.

BOOK: The Antidote: Inside the World of New Pharma
11.18Mb size Format: txt, pdf, ePub
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