Vertex sells INCIVEK royalty rights, shifts focus to cystic fibrosis

Janssen will pay $152 million up front for the royalty rights

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CAMBRIDGE, Mass.—Vertex Pharmaceuticals Inc. has announced the sale of its product royalty rights related to INCIVEK (telaprevir) to Janssen Pharmaceutica N.V., a Johnson & Johnson Company. Per the terms of the agreement, Janssen will pay Vertex $152 million in cash in the fourth quarter of 2013, after which it will cease to pay Vertex royalties on sales of the drug as of the beginning of 2014.
Given the change to the 2006 collaboration agreement between Vertex and Janssen to develop and commercialize INCIVEK in Europe and other regions, Janssen will now hold sole authority to market and promote the drug in those regions. The companies first signed a collaboration agreement for the drug in June 2006, in which Janssen received exclusive rights to the compound in Europe, South America, the Middle East, Africa and Australia, while Vertex retained exclusive commercial rights in North America. In return, Vertex would receive $165 million up front, with the potential for an additional $380 million in milestone payments, as well as tiered royalties.
“The monetization of INCIVO royalties provides cash to enhance our corporate financial position and continues to position us to support our investment in cystic fibrosis and to advance other key opportunities in our pipeline,” Ian Smith, executive vice president and chief financial officer of Vertex, said in a press release.
 This agreement comes roughly a month after Vertex released an October 29 announcement of its plans to “focus its investment on future opportunities in cystic fibrosis and other high-potential research and development programs,” and that it would be “reducing its workforce related to the support of INCIVEK following the continued and rapid decline in the number of people being treated with INCIVEK as other new medicines for hepatitis C near approval.” This decision will result in the loss of 370 positions, representing roughly 15 percent of Vertex’s global workforce, and is expected to provide the company with a reduction of $150 million to $200 million in its 2014 operating expenses compared to this year.
At the same time, Vertex also announced its third quarter financial results, reporting revenues of $222 million, which included net product revenues of $101 million from KALYDECO, its cystic fibrosis drug, and $86 million from INCIVEK.
“Our business is at a unique point in its evolution. We have a tremendous opportunity ahead of us to further transform the treatment of cystic fibrosis, which continues to be the company's highest priority development program,” said Jeffrey Leiden, M.D., Ph.D., Vertex’s chairman, president and CEO. “Following the continued decline in the number of people starting treatment with INCIVEK, we today took the difficult step to reduce our workforce supporting this medicine, enabling us to focus our investment on key programs in cystic fibrosis and other diseases to position the company for future growth.”
Vertex also reported on the status of the several cystic fibrosis studies and research and development programs, highlighting that enrollment was complete for its Phase III TRAFFIC and TRANSPORT studies of lumacaftor, and a planned 12-week Phase II study of VX-661 in combination with ivacaftor.
SOURCE: Vertex Pharmaceuticals

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