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Vertex (VRTX) Consolidating R&D Ops in 3 Locations, Shutters Site in Canada

3/29/2017 5:59:47 AM

Vertex Consolidating R&D Ops in 3 Locations, Shutters Site in Canada March 29, 2017
By Mark Terry, Breaking News Staff

Boston, Mass.-based Vertex Pharmaceuticals (VRTX) is closing a research facility in Canada, while at the same time consolidating research-and-development operations down to three operations.

Most of the operational changes were outlined in the company’s annual report. In February 2017, the company decided to consolidate its research activities to Boston, Milton Park and San Diego. As of December 31, 2016, Vertex had about 2,150 employees, compared to 1,950 the previous year. About 1,725 are located in the U.S., 350 in Europe and about 75 in Canada.

A company spokesperson told Endpoints NewsJohn Carroll that the company “will continue to invest significantly in scientific innovation. There were no layoffs in Boston research. Our plan is to continue to increase the number of people in our research organization.”

However, some staffers at the company told Carroll that there were some layoffs in R&D in Boston, although “not many.”

Carroll writes, “A former Vertex staffer told me, also anonymously, that the company frequently used such ‘stealth layoffs’ to root out 10 to 15 research staffers in particular groups at a time. None of them were announced, as new hires were brought in and the overall headcount didn’t drop.”

He also notes that disruption of R&D seems to be a recent trend at established biopharma companies, citing Merck (MRK), AstraZeneca (AZN) and Amgen (AMGN). “In most cases,” Carroll writes, “these companies are shuttering outlying operations and concentrating forces in their top hubs.”

In January, Vertex licensed four of its oncology R&D programs to Merck KgaA (MKGAF.PK). Vertex received $230 million upfront, and will receive royalties on future net sales. Merck was taking on full responsible for development and commercialization.
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One of the programs was for ataxia telangiectasia and Rad3-related (ATR) protein kinase inhibitors. It had two compounds, VX-970 and VX-803. The second program was a DNA-dependent protein kinase (DNA-PK) inhibitor program. Its clinical candidate is VX-984, currently in a Phase I trial. Preclinical programs include an immuno-oncology program and one that it describes as “against a completely novel target.”

Also, in summer 2016, Vertex abandoned a late-stage trial for a combination of VX-661 and its lead drug for cystic fibrosis, Kalydeco (ivacaftor) in patients with one copy of the F508del mutation and one copy of a mutation that causes minimal CFTR protein function (F508del het/min), after it failed to show an improvement in lung function.

And just yesterday, Vertex announced results from two Phase III trials of VX-661 and ivacaftor that showed the combination provided statistically significant improvement in lung function in CF patients ages 12 and older. These patients have specific mutations in the CF transmembrane conductance regulator (CFTR) gene.

“The tezacaftor/ivacaftor combination treatment demonstrated clinically meaningful benefits, with a favorable safety profile, across multiple patient groups,” said Jeffrey Chodakewitz, executive vice president and chief medical officer at Vertex, in a statement. “This combination treatment may provide a promising new option for treating the underlying cause of CF in the future and brings us increasingly closer to our goal of developing new medicines for all people with the disease.”

Carroll, writing for Endpoints News, noted, “The stock responded in kind, shooting up a whopping 17 percent in after-market trading, even though there’s little sign that the data on display will thaw some frigid relationships with a large segment of payers who clearly are reluctant to cover these drugs.”

This is particularly true in Europe, where some insurers are reluctant to pay $259,000 for Orkambi. Carroll notes, “That reluctance on payers’ part has kept revenue dragging significantly behind initial expectations. And there’s no convincing reason to believe that the combo data is so strong payers will drop their objections and embrace the new pair-up.”

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