The Antidote: Inside the World of New Pharma (63 page)

Cumbo felt upended as Vertex evolved quickly from a twenty-year-old development-stage company staking its survival on a quick rout in hepatitis C to a cash-rich profit maker with a coming bonanza in cystic fibrosis and a smorgasbord of pills in mid- and late-stage trials for other diseases. He had built the Incivek sales team to last a decade, marketing multiple drugs. But the onrush of the first all-oral regimens meant that for an indefinite period, starting as early as 2014, they would have no competitive product to sell. Meanwhile, Incivek sales had peaked, down 40 percent year-to-year and projected now to slump steadily until they cliffed. “The tide is going out,” Cumbo said, “and I got caught in it.”

He had been all-in for two and a half years, coming to understand as well as anyone else at Vertex the thankless challenges and inevitable crises of operating a business driven, at its core, by research. Neither Wall Street nor the marketplace had shoved Vertex off its stance that R&D was paramount. Mueller’s clinical strategy maintaining telaprevir as its cornerstone and his aversion to nucs had momentarily beggared Smith’s determination to finance as broad a pipeline as possible, leaving Vertex to face a period of unexpected austerity without a midterm play in HCV and with little clarity beyond that. The field force would not have
a chance, as Cumbo put it, to “kick Gilead’s ass”—not for several years at least. CF was expected to pick up the slack.

A builder builds. In August Cumbo flew to San Diego to dive with great white sharks, descending in a battered steel cage off Guadalupe Island, Mexico, to come face-to-face with their prehistoric snouts and razor teeth. What did he learn? “To stay in the cage.” Fending off feelers from Abbott and other large players in hepatitis C, he quietly edged throughout the fall toward joining a seventy-person company, Sarepta Therapeutics, as head of business development as it prepared to launch an orphan drug for muscular dystrophy. In early December, Cumbo turned in his notice, delaying his announcement to his team until after the first of the year.

The so-called “fiscal cliff” loomed in Washington. Obama’s reelection clarified the near-term prospects for the $2.7 trillion US health care economy, meaning Obamacare would soon take effect, and the drug industry, for the first time in a decade, introduced a bumper crop of new medicines. Nearly half the year’s thirty-nine new drugs approved by the FDA, like Kalydeco, treated rare diseases, signaling the coming-of-age of the new post-genomic paradigm in pharmaceuticals: the prevalence of eye-wateringly high-priced medicines that transform the lives of a handful of patients. As Vertex had learned, the vision of finding such drugs, the reduced obstacles to market, and the incomparable value to be derived from them were irresistible to nearly all companies now, smaller ones especially.

On December 19 Vertex issued two product updates, each in its way reflecting the company’s maturation under Leiden. The National Health Service in England, after pushing back on price, agreed to pay for Kalydeco for the 270 patients in the United Kingdom with the G551D mutation. The decision, which was expected to consume half its budget for
all
cystic fibrosis patients, was cleared only after Vertex agreed to an undisclosed discount. It was one thing to convince American insurers and managed care companies to pay $300,000 for a drug; convincing austerity-hit foreign governments was another. With health care systems around the world under increasing financial stress, it wasn’t too
early to think that the super-orphan commercial strategy might become unsustainable, sooner rather than later.

The company also announced that the FDA had placed a black box warning label on Incivek, cautioning prescribers that the drug had caused fatal skin rashes in at least two patients. More than fifty thousand patients had started on the medicine, but despite the company’s extensive rash management protocols, two patients in Japan had developed a potentially fatal skin condition, Lyell’s syndrome, one dying of multi-organ failure, the other surviving after she discontinued treatment. Another woman died after being hospitalized. Vertex redoubled its instructions to doctors to halt therapy as soon as a serious skin reaction was identified, as the fatal cases resulted when patients stayed on therapy even after severe rash was diagnosed.

A black box warning at launch, or for a mass-market pharmaceutical, could break a product, but in specialty diseases where you’re dealing with very sick patients, such advisories are both common and expected—“a hiccup,” Cumbo called it. Every drug he’d ever launched had eventually earned one. As anxieties flared among the field force, Cumbo and Vertex’s marketing leaders fanned out to steady the organization. “That was torture,” he says. “I did all the conference calls. Area directors. Regional marketing managers. Reps. Treatment educators.” Where a year earlier some voices inside the company might have been apoplectic, now there was no crisis. Wall Street shrugged off the news, preferring instead to celebrate the Kalydeco ruling. VRTX finished the day up 1.5 percent, closing at $45.85.

The area under the Incivek curve no longer ruled the Street’s calculus in pricing the company. Selling nearly $2.5 billion of the drug in the twenty months since launch, Vertex turned a corner. Of seventeen firms providing ratings, according to a year-end summary, thirteen were positive, four neutral, and—notably—none negative. The analysts all now loved the company’s CF franchise, viewing it as a major growth driver. The bulls were especially optimistic about its agreements with Glaxo and J&J to develop cocktails around the Alios nucs. No short players appeared on the horizon.

Vertex showed Cumbo its appreciation by not walking him out the
door the day he said he was leaving and by letting him keep his computer through the holidays. Gearing to move up to business development at Sarepta, a stratum leap that would raise him into the realm of M&A trades and global licensing deals, he prepared for his debut: the Morgan conference. Sarepta had already arranged his San Francisco meeting schedule. Vertex was his first appointment of the week.

Within thirty-six hours of announcing his departure on January 2, 2013, Cumbo answered 130 texts and 200 people had visited his Linked-in page. What his leaving signaled for Vertex wasn’t yet fully clear, but it traumatized an already disheartened sales force. “They’re shocked and they’re scared,” he said. Cumbo was a long way from hiring at Serepta, just entering late-stage trials with its lead drug and with early-stage and midstage development programs in hemmorhagic viruses and flu, but he relished the chance to help build a company from scratch, and he could imagine working with the best of them again in the future. By the end of the week three of them turned in their notice. Whether an exodus would follow depended on other considerations, but Vertex now had to face that grim prospect too.

Of all the costs of yielding its lead in hepatitis C, holding on to an anxious, dispirited field force was among the most pressing but far from the most crucial. In the longer term, the company’s years of delay in bringing Incivek to market and the shrunken window of opportunity brought on by the looming arrival of nuc-based, all-oral regimens had forced a reckoning. Incivek may have been a booster rocket, as Emmens said, but what if it hadn’t boosted the business high enough, fast enough to reach escape velocity, to soar? Vertex was an operating company at long last. Now what?

Could it continue to innovate and forge ahead when it failed to keep people who “bled purple,” not just Cumbo and Murcko, who had landed on his feet—consulting, teaching at MIT and Northeastern, and mentoring young scientists pro bono—but also fellow positive deviants Ann Kwong, who left to start a drug-innovation consultancy, and medical affairs director Cami Graham, who returned full-time to clinical practice? What had senior management learned that would keep it from
losing its lead in CF and other disease areas? Big Pharma may not know how to innovate but it remains effective at copying and incorporating ideas that work. It’s not good enough to be “first and worst,” as one Boston fund manager liked to describe Vertex’s dilemma as a pacesetter. Mueller’s mystique aside, it had been five years since the company had brought a breakthrough molecule out of its own labs and into development. A leader leads. Had Vertex become, in the end, as Vertexian operationally as it was scientifically? Was it truly the twenty-first-century New Pharma prototype it claimed to be?

At the Morgan confab, the perennially dismal pharmaceutical world bristled with new excitement, buoyed by the surge in FDA approvals. “Rational exuberance,” someone called it. Leiden used his twenty-minute slide show to refocus the company’s strategy and prioritize key business goals for the year. Here was a clear statement of bittersweet success. Vertex, he said, was redirecting development toward specialty diseases—hepatitis C, CF, Huntington’s disease, multiple sclerosis, and cancer—and it would seek partners and outside funding to advance its JAK3 inhibitor and flu drug. He announced that the FDA had granted Kalydeco and 809 its first two “breakthrough drug” status labels, as part of a larger effort to speed important new medicines to patients. “Innovation is our lifeblood,” Leiden told his audience, “our special sauce.”

Leiden told Bloomberg News in an interview that the company would consider collaborations enabling it to get VX-509 to patients with RA and other autoimmunities without having to fund large-scale trials and a big commercial team, a deal that “would maintain value long term.” He also said Vertex wouldn’t fund trials of the flu molecule VX-787 with its own money, setting back the program indefinitely and demoralizing those who thought it represented the best chance of becoming a lifesaving medicine from among those in Vertex’s current pipeline. “There are some things we are not going to do,” he said. “That’s new for Vertex.”

Elsewhere, in another suite, Cumbo sat down for his first meeting as a strategist and deal maker. Across the table was Christiana Stamoulis, Vertex’s senior vice president for business development. Stamoulis had the usual pedigree: two degrees from MIT, a consulting stint, leadership positions at Goldman Sachs and Citigroup, a veteran of some of the
biggest deals in industy history. Cumbo was reassured to discover that he was treated well, respected.

Vertex was something else to him now, something like what Merck had been to Boger: an education, a crucible, a competitor, a potential partner; maybe, in some future, a takeover threat, or in some alternative one a target. “Strange world this bd thing . . .” he texted later in the morning, “but I think I like it!!! It will be challenging again . . . It will be fun to watch and see how they (bd pll) discount me because I don’t have an MBA from Harvard and come from ’bama . . . made a living off people underestimating me.”

In February 2013 Vertex announced that it would start a pair of late-stage studies—1,000 patients at 200 sites—to test its first combination therapy in CF. Pressed on by the FDA’s determination to show that it could speed up approvals, the company decided to evaluate two doses of VX-809 in combination with Kalydeco for twenty-four weeks. With patients in urgent need of new treatments, Olson and the CF franchise steering group spurred on the timetable for FDA review. “If the Phase III is ultimately successful (late 2013/early 2014), upside for this stock could exceed anything in our coverage universe,” ISI’s Schoenebaum speculated. “But with that upside risk comes downside risk as well. We remain ‘Buy’ rated on Vertex, but admit it’s quite binary and not for everyone.”

A few weeks later, Keith Johnson went on intravenous antibiotics for the first time in three and a half years—since December 2009, a few months before he started on VX-770. He hoped to qualify for the combination trial but his FEV1 percentages were declining and, after his experience in the last trial with VX-661, he wasn’t sure that enrolling in clinical studies was his most effective route. He had concluded that his best hope of getting access to Kalydeco was to wait until the combo was approved for people with his genotype. “I’d rather get what I know works,” he said, “and leave the science to somebody else at this point.”

On a Monday in mid-April, Patriots’ Day, two bombs exploded at the finish line of the Boston Marathon, killing three people, injuring hundreds of others, and plunging Boston and Cambridge into a cycle
of fear, apprehension, grief, and resilience, the reeling epicenter of the most intensive antiterrorist manhunt and media storm since 9/11. Vertex had received data from the midstage study combining VX-661 and Kalydeco—Johnson’s trial. Patients taking a 100-milligram dose of 661 had a 9 percent relative improvement in lung function while those taking 150 milligrams improved 7.5 percent. The drug was well tolerated. The company, weighing internal and external events, announced the findings as soon as the markets closed on Thursday. During the conference call shortly after four thirty, Mueller disclosed that it had advanced a third corrector, VX-983, into development.