Vertex Signs $800 Million Deal with Novartis
By Cindy Christ

Vertex Pharmaceuticals Inc. has signed a pact with Swiss drug giant Novartis Pharma AG worth up to $800 million to develop drugs targeting cancer and other disorders including cardiovascular, inflammatory and neurological diseases.

The companies said the alliance will focus on commercializing small molecule drugs directed at kinase proteins.

"We and Novartis intend to dominate this field of research," said Joshua Boger, Ph.D., chairman, president and CEO of Vertex Pharmaceuticals, in an interview with CNBC financial television.

The agreement, which is equal to roughly half of Vertex's market value, represents a huge revenue opportunity for the Cambridge, Mass-based firm.

Under terms of the deal, which requires regulatory approval, Novartis could pay Vertex up to $800 million over six to eight years, based on the full development of eight drugs.

In addition, Novartis will provide Vertex with a $15 million initial payment and research funding of $200 million over six years. Vertex will take charge of drug discovery and testing.

Vertex also may receive additional license fees, milestone payments and reimbursements of $600 million or more subject to results, the companies said.

Novartis will have exclusive worldwide development, manufacturing and marketing rights to eight drug candidates that it accepts from Vertex. Vertex also may have co-promotion rights in the United States and Europe.

"The collaboration is expected to increase the flow of new drug candidates into development, adding to the innovative power of the Novartis pipeline in the years ahead," said Daniel Vasella, M.D., chairman and CEO of Novartis AG.

Founded by a former Merck executive, Vertex discovers, develops and markets small molecule drugs that address major, unmet medical needs. The company has nine drug candidates in clinical development to treat viral diseases, inflammation, cancer, autoimmune diseases and neurological disorders.

Vertex's first approved drug is amprenavir, sold under the name Agenerase, an HIV protease inhibitor the company co- promotes with Britain's Glaxo Wellcome.

Headquartered in Basel, Switzerland, Novartis revenues totaled $21.6 billion in 1999 from sales of consumer health, generics, eye-care and animal health products.

The firm recently announced plans to spin off its crop protection and seeds units and to merge them with the agrochemicals business of AstraZeneca in the second half of 2000.

Vertex (VRTX) shares rose on the multimillion-dollar deal, closing up $0.83, or 1.3 percent, at $64.27.

The American Depositary Receipts of Novartis AG (NVTSY) were up $1.29, or 1.9 percent, at $70.59.