by Barry Werth
In the collaboration with Lilly, Vertex rediscovered that HCV wouldn’t yield to the usual stratagems. The front end of any conventional drug discovery effort consists of a screening assay, wherein a multitude of compounds are tested for biological activity. Most screens are deliberately set up so that about 1 percent of the molecules are hits, but Vertex and Lilly devised one so sensitive that any detectable hit would cause a signal. “Lilly screened their entire sample collection against HCV protease,” Boger recalls, “and they had none. Zero verified hits. It was useful to have done that experiment, because even for a company like Lilly, it did sort of cement internally that there was no other way to do this except design.”
For the chemists and modelers, the goal wasn’t just to invent a molecule that blocked the protease but to fulfill the towering requirements that make all anti-infectives, especially direct-acting antiviral drugs, so hard to develop. The key problem is resistance: the virus, replicating rapidly, evolves variants that allow it to evade a new threat to its survival. Medicinal chemists are skilled at molecular subterfuge, substituting groups of atoms that cause corresponding groups on a target to bind to them instead of their usual partners. But a variety of other properties ultimately rule: the mix of features that make a compound “druggable”—that is, safe, soluble, and stable enough to become an approved medicine. In the end it must be formulated to deliver a pure, precise dose in milligrams to patients while being manufactured—cheaply, reliably, safely, and competitively—in multi-ton lots.
“There are lots of ways to design a potent compound against an active site, and one of them is to put down a lot of grease that touches a lot of grease,” Boger says. “You can lob down a lot of stuff that touches a lot of stuff. But the problem is, if you rely on that kind of strategy, you’re just asking something like a viral enzyme to mutate and knock your compound out. So we did a lot of dynamics with the enzyme structure to see what kind of flexibility it had. And we did a lot of work trying to ask the question, not what’s the best way to make a potent compound, but what’s the best way to make a potent compound that the enzyme will have the hardest time kicking out—and, oh, by the way, because of the nature of the active site, that doesn’t turn out to be brick dust [about as soluble as sand]. It was a really hard problem. It took a long time.”
Vertex and Lilly clashed at every turn. Key to designing a drug is determining where, and in what concentrations, it should collect in the body. The rule of thumb for most drugs—and most drugmakers—is that a molecule should be small enough and soluble enough to circulate in the blood and be excreted in the urine. Large lipid-loving compounds attracted to fats and waxes—grease—are removed from the plasma and gather in the liver, which makes fat and absorbs toxins. No one knew for certain where HCV hid. But a year into the project Kwong had a key insight while sitting in an educational session at a meeting on liver diseases. A transplant surgeon showed a slide comparing RNA levels of the virus in patients just before and after they had their livers replaced. There was a precipitous drop. “Boom,” she recalls. “Back then it was controversial where the virus replicated. Well, my God, I don’t know where else it replicated, but it definitely replicates in the liver. I came back, and I said to the team, ‘We need to target the liver.’ ”
Lilly resisted the idea, passively at first. Its corporate culture was conventional, rigorous, Midwestern, and orthodox, and also, tinged with fresh embarrassment and regret over the dissolution of another recent partnership in antivirals. Lilly had sponsored Agouron’s HIV program, then decided it didn’t want to develop the molecule and opted out of the collaboration; as a result, Agouron, in partnership with Japan Tobacco, took back worldwide commercial rights to what would become a billion-dollar drug. In discussions with Lilly’s scientists, Tung and others from Vertex encountered mounting disagreement over their fundamental goals, even the drug-like profile they thought they had committed to pursuing together. “One of the questions was, is the virus replicating solely in the liver, or are there other reservoirs outside the liver where it’s replicating elsewhere and becoming resistant?” Tung recalls. “We had a tremendous disagreement with Lilly over this issue. Their received wisdom is you’ve got to have significant blood levels of the drug.”
Lilly’s concept of a druggable molecule was limited by what researchers already knew about all existing drugs and their chemical interactions with the five hundred or so known protein targets in the body—a statistical approach preferred throughout Big Pharma for narrowing leads that’s heavily biased toward compounds that are small, soluble, and well behaved. After much intellectual soul-searching, Tung, Thomson, Murcko, and Pravin Chaturvedi, Vertex’s head of pharmacokinetics, developed a drug profile that fell outside all its major parameters. “Lilly was arguing for a very mundane, well-known computational algorithm that basically works only within its memory banks,” Thomson says. “It can interpolate and piece together successful combinations of the pieces of drugs that we’ve already tried. But it can’t invent new ones. In essence, they were trying to tell us that their new ultraslick horse and buggy was far more sophisticated than our Ferrari because they didn’t get what the technology was that made the Ferrari.”
Sato, becoming directly involved, insisted that the collaboration focus on molecules that went to the liver. Hepatitis C, after all, was a disease of that organ. More crucially, an amended agreement was needed before Vertex could start to develop relevant animal models to test if its compounds stopped the virus where it needed to be stopped. “Vicki certainly, as she will always do, let them know who’s boss, and they responded accordingly,” Tung recalls. The Lilly team, already souring on the partnership, continued to make new variants on Vertex’s design even as more resistance to the program erupted among the process chemists at Lilly, who were struggling to scale up production of the final class of compounds so they could be tested in animals and humans. Vertex chemist Dave Deininger recalls, “Their preclinical development people said, ‘We can’t do anything with this. It’s got none of the characteristics that say, “Oh yeah, that’s gonna be a great drug.” It’s too big, it’s too greasy, it’s peptidal. It’s a rule breaker of all of the rules.’ ”
Highly crystalline, the eventual drug candidate—VX-950, made by a Lilly chemist and based on a Vertex design—was “pretty much brick dust,” as Boger put it. It was less soluble than marble. Vertex had no formulation group of its own, yet as its faith in Lilly’s group faded, Boger could see that HCV might reprise HIV at Vertex: a research triumph but a commercial disappointment, based largely on his partner’s difficulty in getting its molecules into pills and down people’s throats. It was a problem he recognized but had no way of controlling.
A breakneck expansion strategy, especially in a fast-growing high-tech sector, guarantees a business leader a rare degree of power and influence within the company. As chairman and CEO, Boger had more or less blank-check support from the board of directors, most of whom he had recruited after the original members moved on to newer start-ups, and from its first chairman, former head of the war on cancer and pioneering venture capitalist Benno Schmidt Sr., retired.
His executive team now reported to Sato, who elevated the triumvirate that had made its mark with HIV and ever since then had best anticipated and met the broad challenges Boger laid out—the hits, you might say, in his social experiment. Thomson became vice president of research; Murcko, chief technology officer and chairman of the scientific advisory board; and Tung, vice president of chemistry and head of compound selection. Under the redesign, Tung reported to Thomson, but Murcko, with a relatively small group, retained an independent standing as the company’s in-house big thinker, practical visionary, and prodder.
Boger aggressively promoted chemogenomics as the future of the industry, if not a panacea for everything that ailed Big Pharma, something very close to it. With Agenerase on the market, eight drugs in human testing, and hopes of putting five to seven early-stage drug candidates in the clinic during
the next twelve months, he told investors that by 2005, Vertex would start submitting two to three drugs a year for FDA approval. The figure, as he noted, was twice that of Novartis and Vertex’s newly reconstituted partner in ICE, French drugmaker Aventis, formerly HMR. It was an exorbitant claim, one depending on strong, unambiguous findings from its clinical trials and flawless execution of many functions that the company had yet to incorporate.
Even as the genomics bubble burst amid spectacular flameouts of once-promising single-product biotech companies, and as the slump only deepened in pharmaceutical R&D, Boger’s brash evangelism kept the company’s share price afloat above $40, twice what it was a year earlier. “My goal is to grow up and overtake Pfizer, not to be Genentech,” he told BusinessWeek. Pfizer was the world’s largest and richest drugmaker, purveyor of Viagra, the fastest-selling pharmaceutical product in history. It recently announced it would spend $5 billion on research in 2001. Former highflier Genentech, the world’s prototype biopharmaceutical firm, still had no blockbuster after twenty-five years in business, though recently it had begun selling two breakthrough cancer drugs. Powerful scientifically, lauded for its academic-like corporate culture, a pioneer in off-label sales with its strenuous promotion of recombinant human growth hormone for children whose only disability was that they might grow up to be short, the company had become synonymous with the industry’s overly aggressive marketing and oversold hopes. Its stock, which crested at $85 in the bubble, now traded at about $20.
To optimize the research engine it was assembling, Vertex went looking for a company to buy that could quickly do for it what it couldn’t do for itself: namely, provide a way to screen large decks of compounds against its fast-growing array of newly discovered targets, then test the molecules in cells to see what effect they had. High-throughput screening was the very opposite of structure-based design: an attempt to focus and accelerate discovery not with precise molecular knowledge but with advanced robotics, miniaturization, and proprietary methods for culling new hits. But in the new era of digital information sharing and genomics—call it infonomics—Boger believed the two approaches could complement each other.
One business soon stood out: Aurora Biosciences Corporation of San Diego. Cofounded by future Nobel Prize–winning chemist Roger Tsien, the company led the industry in developing assays, screening, and cell biology. It had drug discovery programs in numerous areas, but its $60 million in revenues came chiefly from providing screening services to more than fifteen major life-sciences companies and research organizations, and its management felt that a merger with Vertex could help it evolve from a screening site into a fully integrated drug discovery company. Aurora’s three hundred employees worked in a gleaming white two-story industrial building in a grassy R&D park on a bluff overlooking, to the east, the freeways and metastasizing sprawl north of downtown. A good golfer with a Santa Ana wind at his or her back could stand in the parking lot, facing an uphill lie, and hit the famed Torrey Pines championship course with a strong drive and a long three-wood.
After three months of negotiations and strategizing about how to put the two companies together, Vertex announced on May 1 that it would acquire Aurora for $592 million in stock. “We are going to seize as much of this ground as we can,” Boger told the New York Times. “This is not something we can come back to in twenty years. The fun will all be over.” From Aurora’s perspective, the acquisition promised considerable, but not total, independence. After the merger, Aurora would operate as a wholly owned subsidiary of Vertex, but all Aurora partnerships would need the approval of Vertex management. Aurora’s chairman, chief executive, and president, Stuart Collinson, would sit on Vertex’s board.
A few days after the announcement, Boger and Sato met in Boger’s office to review the deal and cut through the remaining issues. Most pressing was Aurora’s collaboration with the Cystic Fibrosis Foundation. The foundation was a health care nonprofit started by parents of children with the disease, the most common fatal genetic disorder in the United States. CFF had contracted with Aurora to screen for drug leads against four protein targets that together they had identified as promising.
Cystic fibrosis is a painful and wasting condition, a nightmare for children and for their parents, who watch them suffer more and more, struggling with little hope against coughing and wheezing and respiratory infection and malnourishment, knowing in the end, even with the salvation of a lung transplant, they will almost surely die young. Emerging from deep familial agonies, the foundation drew its identity and character from informed, activist parents faced with an excessively cruel genetic twist; that is, both parents must carry the defective gene. They don’t have the disease themselves, but in coming together, they give it to their kids.
Founded in 1955, when children born with CF seldom survived into their teens, CFF grew into a radical, determined, hard-charging, and highly successful pioneer in what’s called venture philanthropy. It raised and invested nearly $600 million to advance life-sustaining therapies, using the proceeds from one to leverage the discovery of others. These symptomatic treatments had nearly tripled life expectancy, and patients now lived on average until their midthirties. But there still were no medicines for attacking the underlying genetic defect that causes the cells that line the body’s cavities and surfaces to become congested with thick mucus secretions, blocking up the pancreas, the gastrointestinal tract, and, most lethally, the lungs and airways.
CFF President and CEO Robert Beall had approached Tsien, among others, about searching for new avenues, to get at the underlying cause of the mucus buildup. Tsien was the only one interested. In May 2000, after enlisting William Gates Sr., head of the Bill & Melinda Gates Foundation, to donate $20 million toward the idea, Beall and CFF pledged Aurora $47 million over five years to screen for novel therapeutic agents, the largest contract ever awarded a for-profit business by a nonprofit health organization. Sato was scheduled to meet with Beall the next day to discuss the future of the program. A biochemist, he was a former division chief in endocrinology and manager of most of the CF work at NIH, a heavily networked activist-scientist with a strong medical staff, excellent contacts in high places, and ferociously committed donors. Bald except for a ring of white hair, a visceral, bespectacled bullet of a man, Beall shared the urgency of patients and families and was indeflectably determined to press his collaborators to feel the same way.
Boger would present his recommendation the following week to the board. Unlike the partnerships with, say, Aventis in rheumatoid arthritis and Lilly in hepatitis C, this was a nonobvious alliance and an unusual business model. The disease, the foundation, and Beall alike all raised numerous issues complicating his and Sato’s thinking. Though they were enthusiastic about the opportunities and drawn by the challenge of chasing a genetic disease with a small molecule—disabling a normally functioning protein is one thing; fixing a broken one quite another—both of them first had to weigh the economics, which at a glance looked prohibitive.
They knew they could very reasonably shelve the project. CF affected only thirty thousand people in the United States and about seventy thousand worldwide. Could Vertex justify to investors passing up potentially far more lucrative opportunities if it meant having to fund clinical trials for so limited a disease? (With so few subjects and a small cartel of specialists controlling access to them, the cost of CF trials would reach $100,000 per patient.) Would the CFF, with its own interests and its emotional urgency about bringing new treatments to patients, meddle in Vertex’s research? Did Beall, with no experience in industry, even know what a real drug candidate looked like? Sato recalled their line of reasoning in a Harvard Business School case study:
This deal with the CFF made great sense for Aurora as a screening company, but can we craft a deal that makes sense for us as a drug company? We already have several compounds in Phase II with greater market potential, so will continuing a partnership with the CFF just be a distraction? It’s the opportunity cost that’s key here: If
we commit to CF, are we limiting our upside on drugs with bigger market potential? And obviously, the terms of the Aurora partnership don’t begin to address the investment we will need to make to launch a real drug discovery effort.
As they went back and forth, Boger’s phone rang. It was Aldrich, calling to congratulate them on the merger. Boger and he had remained friendly, continuing to share season tickets to the Red Sox and, on occasion, swap business advice. Aldrich said he favored extending the agreement with the foundation, provided the funding approximated what Vertex might get from a corporate partner, and that the CFF partly fund some early-stage development as well. Though the market for CF drugs was comparatively modest, he urged Boger to keep the program going. “Working with pharma,” Aldrich says, “we were always caught in this tug-of-war over who gets the economic value of the drug. Seventy-five percent of the negotiations center on that. When working with charities you just don’t have to engage in that tug-of-war. It’s true, Wall Street gets more excited about deals with big corporate partners, but in the end, this is a less expensive form of financing.”
It helped that a small group at Aurora was passionate about the work, which outside the company was largely dismissed as both a long shot medically and, given the relatively small upstream rewards, just not worth the investment—a black hole, scientifically and financially; a hobbyhorse for Beall. Academic research in the field had bogged down; Vertex would have to do almost everything itself. The area was saturated with disappointment. For a decade, hopes had soared that a normal version of the CF gene could soon be delivered to affected cells in the lungs, pancreas, and other organs of dying children, and that those cells would begin to churn out healthy replacements for the defective protein at the root of the disease. But all such “gene therapy” experiments had been discontinued in 2000, a casualty of oversold hopes and deaths among the first test subjects.