Q & A With Barry Werth

February 27, 2014

Q: What inspired you to return to vertex 20 years after
publishing “the billion-dollar molecule,” your
riveting first book on the biotech startup, and
continue the story? Why is “the antidote” an
important story to share with the community, and
why now?

A: Hanging out inside a trailblazing start-up was easily the most fun I’ve had as a reporter. The pace was breakneck, the personalities fantastic, not to mention that scientists by and large are wonderful sources. Really smart, really interesting – born teachers. So I was looking for that again. But the main thing was I sensed an opportunity. I thought the time was right to see whether after a quarter century of predicting that Vertex could do what Big Pharma couldn’t, founder Josh Boger had turned out to be a visionary after all. Boger, an outsized showman as CEO, has often been accused of arrogance. One of the first things I heard him say publicly to the company when I returned in 2011 was: “Arrogance is only a problem if it doesn’t turn out to be true. If it turns out to be true, it’s just persistence.” I wanted to discover if Boger was right.

What I found was — to a remarkable degree — Vertex has done just what Boger and the founding scientists set out to do. This is no small thing, given the steep risks, enormous obstacles, stupendous costs, and staggering odds. At a time when America is struggling to maintain its edge in innovation, I think the company’s success can be a touchstone for recognizing what works and what doesn’t in trying to build a sustainable, research-driven business. That it’s a biopharmaceutical company, where the difference between success and failure can be the difference between life and death for patients, for me only heightens the drama and urgency of the story.

Q: The biopharma industry has certainly gone through
dramatic changes in the last 20 years and is rapidly
evolving today. Will we ever see another vertex?
could a company start and grow the same way in
today’s environment?

A: The revolution is biopharma since the early nineties has been nothing short of breathtaking. I’ll give you just one example. When Boger left there in 1989, Merck was the most admired corporation in America. It also was a tower of vertical integration, owning everything it felt it needed to design and develop blockbuster drugs. It had vast resources: huge PK and toxicology labs, a juggernaut sales force. Not too many years before that it even owned the rail cars that transported raw chemicals to its manufacturing sites and the trucks that delivered its pills to pharmacies. Now fast forward to 2014. Boger is executive chairman of Alkeus, which has a promising treatment for the leading cause of childhood blindness. The company has an open IND, it has manufactured drug, it has orphan drug status and clinical sites ready and a verbal agreement with the FDA into Phase II trials. And it’s two people. In other words, the old organizational structures are all gone – smashed – and innovation favors smaller and smaller, albeit highly networked, collaborative entities.

Could today’s environment produce another Vertex? I don’t know. The key elements are the familiar ones: people, time, and money. The reason Vertex is successful so far is that it set out to build a broad portfolio of transformational medicines for people with serious illnesses. It took 20 years and almost $4 billion dollars to become profitable, and as it is, it’s been losing money again in the past year, and won’t be in the black again probably until 2015. That’s a long time to string investors along, especially in a capital market that exalts shareholder value. That said, hope springs eternal. There’s so much excitement in the field right now about the future that investors are happy to bet and bet big.

Q: The book summary references an “industry under siege
and in crisis.” What did you see in researching this
book that leads to that categorization? is the
future bleak or bright for biotech?

A: These are disruptive times for US pharma. The blockbuster era – which has engendered much of the bad behavior in recent years; the fraud, me-tooism, off-label marketing and other aggressive attempts to squeeze value out of aging product categories – is over, which is not to say that there won’t be drugs that generate billions of dollars in sales, but that these drugs will be specialty products, for a relatively small number of patients. The industry is facing a productivity crisis just as payers worldwide are pressing down on prices, emphasizing outcomes that have demonstrable economic value. Factoring in the 30 to 1 failure rate, it now costs about $5 billion to bring a new drug to market. What this means that all companies have to increase their hit rates while dramatically bringing down costs. For the bigs the challenge is to restructure, focus down on their core strengths. For small and mid-sized biotechs like Vertex, it’s to stay in the race long enough, investing billions, in a mad dash to come up with a product or products that
can make them sustainable.

I’m an optimist. I think smart companies will figure out how to use new advances in technology and new scientific insights and clever management to make this happen. Not a lot, mind you, but enough to prove the concept and make a difference. The good news is that the future is here. Advances in personalized medicine like Vertex’s Kalydeco are showing the way towards highvalue, transformational medicines for small numbers of very sick people. This is great for patients, but in the near term at least these breakthroughs are going to drive the costs of drugs even higher. For now payers are willing to foot the bill, but we’re on the verge of a reckoning. Society is going to have to decide whether the trend is “worth it.”

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