The Antidote: Inside the World of New Pharma (12 page)

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.

Boger and Sato weighed their decision as dispassionately as they could. Rare hereditary diseases, particularly those caused by lone genetic mutations, represented just the sort of scientific challenge that Vertex
and Aurora coveted, far more tractable and open to a highly focused research effort than, say, most cancers, where a dozen things might be happening to make cells go wrong and metastasize. The rewards for groundbreaking science in one such disorder might open up related possibilities in other areas. “We’re always a bit of a sucker for exciting science with a mission,” Boger told the HBS authors. More to the point, the bottom line was, insistently, the bottom line. “Simply and clearly put, without the CFF funding, Vertex would not be in CF.”

No company would be. Not even the richest could afford it.

Many people from around the world would remember the moderate and uneventful summer of 2001 as the fluttering end of a daydream. America stood at a time and place in history where its top news stories for two months running were the mounting suspicions surrounding a California congressman about the disappearance of a young female aide and a spate of shark attacks up and down the East Coast. After the tech-led bust on Wall Street and the disputed election, the national mood was—
how to say it?
—hungover, postcoital, dispirited.

In August, before heading for his West Texas ranch, George Bush announced a new federal policy governing research that used human embryonic stem cells. It was Bush’s first prime-time address to the nation from the Oval Office. He decided that federal money could be spent on such experiments, provided the cells were already derived from an embryo that was created for reproductive purposes and was no longer needed, and that the donor had given informed consent and held no financial stake in the research. Balancing the resistance of antiabortion forces against urgent calls from those for whom such innovation was a last hope, Bush crafted a careful compromise that opened the door, however slightly, to a new and controversial field of biomedical discovery. His aides hailed the decision as Solomonic, a preview of a humble, temperate White House. Half the country still regarded his presidency as illegitimate.

Dr. John Alam, age thirty-nine, assumed a pivotal role in recasting Vertex from a lab-driven boutique—“a creative group,” as Boger called it—to a prescription drugmaker. As senior vice president of drug evaluation
and approval, Alam had overall responsibility for preclinical development, clinical development, and regulatory affairs: that is, the full gamut, from figuring out what toxicological studies to do and determining what doses to prescribe for what indications to having a product approved for sale by the FDA and other countries’ regulators. Within the free-floating group of executives swirling around Boger and Sato, none had more corporate obligations, or access, or sway, than Alam.

He was striking, angular, intense, sharp-featured; slim and dark-skinned with straight black hair and rimless glasses. Thomson had a lot more people reporting to him, Murcko had more strategic influence, but Alam was a company officer, attending board meetings and traveling widely with Boger and Sato to reassure investors that Vertex’s clinical sights were set as high, and in as competent hands, as the research labs. “It was always then Josh and Vicki and some number of senior people,” Alam would recall. “But if there was a two and a half, I was perceived to be the half person.”

Alam focused throughout the summer on the anti-inflammatory compound VX-745, the company’s p38 kinase inhibitor. At his previous company, Biogen, he’d been the sole physician associated with the approval of a biologic molecule, Avonex, another anti-inflammatory now on the market for rheumatoid arthritis. With such drugs, once you got clearance to begin human testing, you determined the pharmacologic effects empirically, based on drug levels. The varied effects of a biologic within the cosmos of the human body—good and bad, wanted and unwanted—are revealed over time by experimenting on sick people. Small molecules are different. You need to be able to predict what they’ll do in humans before you administer them. “Small-molecule drug development is more rational and also just fraught with risk,” Alam says. “It’s toxicology, toxicology, toxicology.”

Vertex had known since 1999, when the company announced it was starting human trials with VX-745, that the compound passed the blood-brain barrier, a semipermeable cellular screen that allows very few substances to cross into brain tissue. In itself, this was no cause for alarm. Short-term studies at ten times normal therapeutic concentrations in rats, dogs, and other species showed no adverse effects. A twelve-week
Phase II study in patients with rheumatoid arthritis launched in January demonstrated that the drug knocked down inflammation, was well tolerated, and had no serious adverse side effects on the central nervous system. As Vertex awaited longer-term toxicological results from an outside vender, and Alam prepared to press the FDA for permission to expand the trials, Boger strained to contain his fervor. “Everyone could taste it,” he says. “It was the first kinase drug, and it was outside the Novartis deal. We were getting Novartis to pay for all of our kinase research, yet our lead drug was outside the agreement—it was, like, how can it be better than this? We got early clinical results from arthritis that said it was working. And we were just getting ready to configure a Phase III trial—an approval trial. The drug would have been on the market in 2006, and it would have been our drug, 100 percent, worldwide.”

In August Alam got the complete results of a longer-duration study in dogs. The data, unexpected because the initial studies had been clean, showed irreversible organ damage. Not only did the animals show symptoms of neurotoxicity but histologic changes as well; there was some degeneration in the nerve fibers of the spinal cord. “I said, ‘Wait a minute, this isn’t a go decision,’ ” he recalls.