The Antidote: Inside the World of New Pharma

by Barry Werth

  In April Boger got a fax from Glaxo Wellcome. “I remember I was on vacation, golfing in Hilton Head, and Josh sent me an email saying we just took a torpedo below the waterline,” Aldrich recalls. “Josh is always very positive about things and always pooh-poohs anyone else’s science or any problem, but this was clearly a problem that shook him up. Searle was a problem for us and Glaxo.”

  A delegation from Glaxo Wellcome arrived at Vertex to tell Boger and Aldrich that they were shutting down the VX-478 clinical trials because they couldn’t get the patent cleared. The timing—on the cusp of testing whether the drug worked—could scarcely be worse. “We’re a public company and HIV is our lead program, so we’re looking into the freakin’ abyss,” Aldrich says. “I said, ‘Before we do this, there’s one thing we could try.’ ” Searle’s position made no sense: if Glaxo and Vertex shut down the program, Searle got nothing. Aldrich suggested sending a joint letter offering to pay $25 million and a 5 percent royalty in exchange for the exclusive license to all Searle’s patent applications in the area of HIV protease inhibition, and warning that if they didn’t hear back in a week they would go the New York Times with the story that they were shutting down the trial because of an IP dispute with Searle. “A Hail Mary pass,” Aldrich called the proposal. Searle took the deal.

  “We would have been blown up. We were toast. We wouldn’t have been able to raise money. Our stock would have gone from fourteen dollars to two. It was very stressful. It was a very nervous place. People could just see that Josh and I were freaked out. That Friday after we got that yes, I had a few pops.”

  The dispute was settled none too soon. Two weeks later, at the 1996 international AIDS conference in Vancouver, British Columbia, a cascade of encouraging reports showed that HIV could be suppressed indefinitely by a combination of antiviral drugs built around protease inhibitors. Three years after the despair in Berlin, combination therapy—drug cocktails—transformed AIDS from a death sentence to a manageable disease. The epidemic peaked in the United States with fifty thousand deaths in 1995. With the first of the drugs—Hoffman–La Roche’s Invirase, Abbott’s Norvir, and Merck’s Crixivan—reaching the market during the previous six months, people who had been planning to die sooner than later suddenly and unexpectedly could see futures for themselves. New York, San Francisco, and other urban centers started to fade as “cities of ghosts.” Other drugs—better absorbed, with fewer side effects—were still desperately needed.

  Vertex, its near-death scare with Searle concluded, remained squarely in the race.

  In the labs, the hepatitis C virus continued to pose extreme problems at every stage. A critical challenge in coaxing individual proteins, which are floppy and active, to rigidify and lock themselves into crystals is learning how to subdue them with the right mother liquor. Researchers anthropomorphize enzymes, describing them as “happy” or “perturbed.” Organic molecules prefer certain conditions to others—some dissolve better in water, others in fats. The goal is to induce a kind of nirvana: amniotic fluid laced with heroin. And yet the insertion of the synthetic peptide caused the team to have to grind hard for months, substituting endless experimental conditions, amid rumors that another company had solved the structure of the protease and was rushing it into print.

  “It’s a contradiction,” Ted Fox explains. “You want to have your protein in a nice soluble, water-based environment, and then you’ve got these peptides that are happy only in organic solvents. They don’t want to be in water. Different solvents, different buffers. It’s a constant game: Can you feed a little bit of it into the protein? Then again, once you’ve got it inside the protein with the protein wrapped around it, occupying its natural spot, it’s fine. A lot of it is fortuitous.”

  During the summer, the company grew its first diffraction-grade crystals of HCV protease—three years and many millions of dollars since Peattie flew to Saint Louis to meet with Rice. The X-ray structure emerged within weeks, and in a frantic push to get it out the door, Murcko, Thomson, Caron, crystallographer J. L. Kim, and numerous others worked around the clock to submit the paper to the journal Cell, which published it in October. To the extreme disappointment of some of them and the disbelief of all, they were not alone. Agouron, which also had a structure of the protease domain in press—though without the cofactor—was claiming a tie, even though its enzyme showed no meaningful activity.

  Boger normally avoided public disputes over scientific priority—it was more important to him that information be found and available than who discovered it—but a statement by an Agouron scientist about catching Vertex at the finish line rankled him, and he responded with an incendiary fax. “ ‘First of all,’ I said, ‘This isn’t the finish line. And second of all, your protein is dead,’ ” he recalls. “I was outraged that they were projecting to the gullible scientific press that they had anything. They couldn’t use it for anything. It was inactive.”

  Yet if Vertex once again had come from behind and bolted ahead of the competition, it was not at all clear from the crystal structure itself what it had won. Caron’s model proved to be spot-on. The binding pocket of the protease was large, smooth, exposed, and greasy—nothing, apparently, like the cozy nooks of HIV and ICE. As the scientists examined it on their computer screens and started talking among themselves about how hard it would be to design inhibitors to block it, a few preferred metaphors arose: a dinner plate; an aircraft carrier; like trying to land a model airplane on a pizza.

  “This protein,” Boger observed drily, “was just not well behaved.”

  CHAPTER 3

  * * *

  APRIL 11, 1997

  The hepatitis C virus offered other inviting targets: a motor enzyme called a helicase that can unzip spirals of genetic code, and a polymerase, which spools out new strands of DNA. At Schering-Plough Corporation, an industry leader in structural biology, virologist Ann Kwong had done vital work to characterize the helicase. But Kwong was frustrated, quietly seeking another job. She had come to Schering’s New Jersey labs from a postdoc at Memorial Sloan-Kettering Cancer Center, where she’d shown a Thomson-like fortitude working day and night in a windowless cold-room. The company, best known for its blockbuster antihistamine Claritin, sold the first approved drug for hepatitis C, Intron A, a biologic, and it was heavily invested in and publicly committed to using structure-based design against HCV.

  Kwong doubted the effort was working and had begun to challenge her bosses in meetings. Now she took the podium to give a plenary lecture on hepatitis C drug discovery at the Tenth International Conference on Antiviral Research in Atlanta. Tung and Thomson, representing Vertex, listened with special interest, then moved swiftly when a couple of members of Kwong’s group mentioned afterward that she was considering offers from other companies. Vertex had so far resisted setting up disease groups because it was organized around protein targets, not illnesses. But Sato was impatient with the pace of discovery in HCV, and the company desperately needed better biology, especially in the realm of antivirals. “Roger and J.T. came over to talk to me and said, ‘Don’t accept. You can’t accept. You’ve got to talk to Vicki,’ ” Kwong recalls. “I’m like, ‘Who is Vicki?’ ”

  Kwong took the train up to Boston to give a talk at Vertex. The small lecture hall was packed: standing room only. Afterward, Thomson, Murcko, Tung, and several project leaders took her to lunch. She explained why she was leaving her job. “I wanted to do structure-based drug design, work on a team, but the way it was set up was, once the biochemistry group came in, we weren’t allowed to talk to each other. I mean, forget that,” she recalls. “All the guys were just laughing, falling out of their chairs, dying. They were like, ‘This is exactly why we left pharma.’

  “At Schering, when Vertex published the structure of HCV protease, the head of research went completely bananas—the fact that Vertex could do this, and we had this huge team, and we hadn’t done it. At Big Pharma, when you had something like this that was very important, every month o
r so the VPs would send something down. From the PowerPoints sent up, the PowerPoints would come down, and your direction would be changing, which I think is ridiculous. So I heard Vertex had these project teams, and the people from the different functions ran the projects, and I’m like, ‘Yeah, right.’ But I was really hoping that that was the case. And it was the case.”

  Kwong was dazzled, but kept her impressions to herself. The problem of designing an HCV protease inhibitor, from a research standpoint, was that there was no clear path. There was nothing to work with, no reagents. No one could grow the virus. There were no cell-based assays to tell you if your compounds were active. That meant, in managerial terms, no clear metrics, no way to measure progress, which in turn meant that the scientists would need to have time and space to figure out novel approaches—time to fail, over and over. And yet Sato didn’t seem to want to wait for Rice’s group or another academic lab or another company to come up with the tools that Vertex would need to advance drug discovery. She seemed fully committed.

  There was no sag in enthusiasm at Vertex about hepatitis C as there was with other less stimulating projects: HCV fired the collective imagination. It was a priority. But at Vertex, speed was the creed, and the project was turning into a costly slog, one that drained money and scientists from other research. With or without middle management, pressure on the team to perform was ratcheting up. Kwong thought piled-up failure was the one true metric of innovation, but coming up empty month after month had strained the organization. Within the terms of Boger’s social experiment, that left it to the team leaders to build their strongest case, preferably with data, although now the company’s purpose and identity seemed also to be on the line.

  “We were living quarter to quarter: ‘Should we kill this project? Should we not kill this project?’ ” Sato recalls. “By now, it was several standard deviations outside of the time that Vertex prided itself on taking to get to a drug candidate. Plus, the clock was ticking on the market. So every quarterly planning meeting it was up for killing, because no one was paying the bill yet. Finally, John just gave one of his inimitable presentations on why we can’t give up now: that this was a project that was made for Vertex, and if Vertex can’t solve it, nobody can solve it, and we should all just work harder.”

  It was Sato—her scientific credibility, organizational élan, skill at managing tension, and spirited enjoyment of the whirling loop-the-loop of entrepreneurial science—who took the results of Boger’s social experiment and tried to shape them into a successful discovery engine as Vertex added new projects and disciplines. A granddaughter of Japanese immigrants and cerebral only child, Sato grew up in Chicago, came east to study and eventually teach at Harvard, and cut her managerial teeth inheriting a brilliant scientific staff and an empty product pipeline at Biogen. It was perhaps her strongest gift that she could direct Nobel Prize–winning advisors, gunslingers like Thomson and Murcko, and postdocs alike with deftness and poise. It helped, in a world of outsized egos, that she carried herself—back straight, head lifted—like a dancer, and, in fact, found time well into her forties to perform in ballets. HCV, she liked to say, was a “game worth the candle”; the rewards would justify the time, effort and money required.

  Sato agreed with Tung and Thomson that Kwong was “really smart” and that Vertex should recruit her to build a virology group. “We didn’t have any positions because we never had any positions,” Sato says. “So I’m thinking, ‘What can I attract her with? What do I have going for me?’ She’s going to need a BL-3 level lab to work in. We don’t have one of those. I don’t know if I can even get a permit to have one of those. Even if I could, it’s going to take me eighteen months to build it. I told her we’d build it. I said, ‘Yeah don’t worry. We want you to come here, we’ll do whatever you need.’ I think my line was, ‘We don’t know anything about this, so we need you to come here and help us. We don’t have a lot of positions, but we’ll figure out a way to help you hire a couple of people.’ ”

  Kwong accepted, prompting colleagues at Schering to doubt her judgment. Had she weighed the downside of leaving one of the world’s most profitable drug companies, a commercial and scientific leader in hepatitis C, for a risky future at an untested biotech with a bare-bones program and no clinical apparatus? She told herself, “How can you pass up the opportunity to build your own group?” When she reported her discussion with Sato to one lab mate, she recalls, he lashed back. “He said, ‘Well, how many people did she give you?’ I said, ‘I never asked.’ If she’s committed to executing this, to me it’s stupid to ask her how many people. She’s gonna ask me, right? What I wanted to know was how she thought. How does Vertex work? Do they really want to do it or not? You need to be driven by the need, by the question, not by the you-get-2.5-people-because-you’re-at-this-level.”

  Aldrich shopped the project throughout the winter and spring, talking with nearly every major pharmaceutical company. All of them were gearing up for HCV. He squeezed in a tour of Japan—a death march of last resort—where almost all drugmakers had concluded that because blood supplies were now screened, the epidemic would soon go away by itself. Aldrich explained that four million people in the United States and as many as sixty million worldwide were already infected and that if they lived long enough, all of them would develop serious liver disease and would die of hepatitis C. He found no takers. Vertex’s ever-escalating terms for doing a deal, as he says, “strained the boundaries of reasonableness. Our stance going into these discussions with Roche, Schering, et cetera, was: ‘We’ve got a program. We’ve got the best team. We’re ahead. We’ve got the resources and the money to drive the project ahead by ourselves, but if we could find a great partner, we think that we could enhance the value. Also, any deal we do, we keep fifty percent of US rights.’ We were asking a lot.”

  As head of the business side from Vertex’s earliest days, and a veteran of other less successful early-stage biotech firms, Aldrich understood acutely its assets and liabilities. He represented it in a rapidly globalizing world that retained a strong belief that leading-edge science would deliver drugs, and he never felt that Boger’s exuberance about Vertex’s goals was unsupported by the quality of its research. He also knew that if you looked at biotech investments on a rational cash flow basis, they were “ludicrous”—Vertex’s less so, but not appreciably. Aldrich’s ancestors had arrived in Massachusetts in 1630 and remained in New England, mostly in law and banking, ever since. Behind a casual demeanor, he was a disciplined Yankee, a bachelor who worked murderously, hit the gym, ate at a university club, then allowed himself one chilled vodka and a single cigarette before bed. He wasn’t surprised when none of the first-line companies he and his people approached returned any real interest. “What we were asking for was pretty outrageous, since we had nothing, really. We didn’t have a clinical candidate, we just had a research program, and they were gonna be footing the bill for everything, yet we were saying, ‘Yeah, but we want roughly half the economic value.’ ”

  Wall Street was in the thrall of the Internet boom. It was anticipated that the Next Big Thing in biotech would be genomics, but the patchwork government consortium to assemble and analyze the entire human genetic code was progressing fitfully, and the revolution in breakthrough drugs that it promised remained far beyond the horizon of all but the most patient investors, a vanishing category. Boger intended to be in the vanguard of that revolution but didn’t know how, so he joined the board of directors of an early DNA sequencing company, Millennium Pharmaceuticals. Since genes encode proteins, he was eager to figure out ways that the coming flood of genetic information could help Vertex better understand its targets and design drugs.

  In March Vertex raised $157 million by selling almost 3.5 million shares of new stock at $45.50 per share. “We caught the price just right,” Aldrich recalls. “It spiked up. We were out there. It was an easy offering.” The company also began talking more seriously with Eli Lilly and Company, the Indianapolis drugmak
er, about HCV protease. Lilly had nothing in antivirals, but its head of research wanted to get into the area, and Vertex’s protease project seemed like an excellent vehicle. Enthusiasm built rapidly throughout Lilly’s labs.

  Aldrich leveraged their excitement by being tough and sticking firm. R&D still carried a lot of weight at drug companies, and he knew that the Lilly scientists were pressuring the business side to make a deal. Vertex’s business development person had resigned, so Aldrich directly handled the “hand-to-hand combat” of getting the agreement worked out. The negotiations were contentious: “a lot of teleconferences with people yelling at each other,” he recalls. Under the terms of the final deal, Vertex received $40 million up front; Lilly agreed to pay all development costs, buy $10 million in Vertex stock, underwrite a hundred-person Vertex sales force, and pay a steep royalty rate. Any drug would carry both companies’ names: Lilly-Vertex.

  In other words, on a program that had no drug candidate, and was, at best, many years and hundreds of millions of dollars from the market, Lilly would be paying the full cost of development and launch, while Vertex stood ultimately to get 30 percent to 40 percent of the profits. An anticipated but still unfortunate collateral price was a pool of ill will. “They were paying for everything,” Aldrich recalls. “Their business guys were pissed at us. They just felt like they had been beaten up. I never like to see that in a situation because it’s not good for us, it’s not good for anybody to have people on the other side who feel like, ‘Yeah, we finally rolled over and made the deal, but we didn’t like it.’ ”