Vertex Pulls in another $105 million
Vertex Pharmaceuticals and Mitsubishi Tanabe Pharma Corporation Amend Agreement to Develop and Commercialize Telaprevir in Asia
Vertex to receive $105 million from Mitsubishi following signing, plus the potential for additional milestones upon commercialization. Phase 3 registration program for telaprevir in Japan expected to complete enrollment in the third quarter of 2009 .
CAMBRIDGE, Mass., Jul 30, 2009 (BUSINESS WIRE) — Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) and Mitsubishi Tanabe Pharma Corporation today amended their agreement for the development and commercialization of telaprevir for the treatment of hepatitis C virus (HCV) infection in Japan and other countries in the Far East. Telaprevir is an HCV protease inhibitor currently in Phase 3 clinical trials in Japan, as well as in the United States and in Europe. Under the terms of the amended agreement, Vertex will receive $105 million following signing, and will be eligible to receive further milestones upon approval and commercialization in Japan.
The previous agreement signed in 2004 between Vertex and Mitsubishi Tanabe provided certain development and commercial rights to telaprevir as a potential monotherapy for the treatment of Hepatitis C. The amended agreement announced today provides a fully-paid license to commercialize telaprevir as part of a combination regimen with interferon and ribavirin to treat hepatitis C in Japan and the Far East. Vertex retains exclusive development and commercial rights to telaprevir in North America. Janssen Pharmaceutica, an affiliate of Johnson & Johnson, holds development and commercial rights to telaprevir in Europe, South America, Australia, and the Middle East.
“This amendment recognizes the value of telaprevir-based combination therapy as a potential major advance in the treatment of hepatitis C in Japan and Asian countries, aligning the telaprevir development program on a global basis,” said Kurt Graves, Vertex Executive Vice President, Chief Commercial Officer and Head of Corporate Development. “Moreover, following this amendment, the cash received strengthens our corporate financial position during an important period of investment and growth as we advance two Phase 3 programs in hepatitis C and cystic fibrosis.”
Terms of the Agreement
Under the amended development and commercialization agreement, Mitsubishi Tanabe will receive a license in its territory for telaprevir-based combination therapy with interferon and ribavirin, as well as rights to manufacture telaprevir for sale in its territory. Mitsubishi Tanabe will pay Vertex $105 million upon signing. In addition, the parties have reached other commercial agreements in the amendment, including potential bonus milestone payments in lieu of royalties, that if realized would range between $15 million and $65 million.
Status of Telaprevir Phase 3 Registration Program in Japan
Mitsubishi Tanabe is conducting Phase 3 registration studies with telaprevir in combination with pegylated interferon and ribavirin in Japan in approximately 300 treatment-naïve and treatment-failure genotype 1 hepatitis C patients. The registration program is expected to be fully enrolled sometime in the third quarter of 2009, and sustained viral response (SVR) data from these studies is expected to be available in 2010. SVR is the goal of hepatitis C therapy, and is defined as the absence of detectable virus in the blood 24 weeks after the completion of treatment.
About Telaprevir and Vertex’s HCV Development Portfolio
Telaprevir (VX-950) is an investigational oral inhibitor of HCV protease, an enzyme essential for viral replication, and is one of the most advanced investigational antiviral agents in development that specifically targets HCV. Telaprevir is being evaluated as part of a global Phase 3 registration program in more than 2,200 treatment-naïve and treatment-failure patients.
Vertex retains commercial rights to telaprevir in North America. Vertex and Tibotec are collaborating to develop and commercialize telaprevir in Europe, South America, Australia, the Middle East and other countries. Vertex is collaborating with Mitsubishi Tanabe Pharma to develop and commercialize telaprevir in Japan and the Far East.
Personal View
I sold August $35 Calls on 60% of our holding last night. This is another great step by Vertex on the path to commercialisation of telaprevir, but does not change my view that VRTX is fairly valued at around the $35-38 mark. I’d like to know mroe about “including potential bonus milestone payments in lieu of royalties“.
The more cash Vertex can raise without extra dilution is good. Vertex’s new CEO is pharma super star by all accounts. Friends in the industry speak of him in awe; midas touch etc etc. So with a better profile than Boceprevir, should be first to market and a super star at the helm I wouldn’t bet against Vertex. It’s fairly valued around current prices, but is most likely to trade upwards towards approval.
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Disclosure: Long VRTX Calls sold on part position
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