Vertex’s Good News

Vertex and Kymera Therapeutics Collaboration

Last week Vertex Pharmaceuticals (VRTX) and Kymera Therapeutics entered into a four-year strategic research and development collaboration to advance small molecule protein degraders against multiple targets.

Kymera is an expert in targeted protein degradation and has its own drug discovery program known as Pegasus™. The collaboration will benefit from this program and from Vertex’s scientific, clinical and regulatory capabilities to accelerate the development of products believed cable of treating serious sicknesses.

Vertex believes its collaboration with Kymera will enhance its drug discovery capabilities, while supporting its strategy of investing in scientific innovation in transformative products for serious diseases. Kymera’s teams’ depth of knowledge and its compelling technology platform has impressed Vertex. Vertex believes Kymera could bring a promising new therapeutic modality.

The Terms of the Agreement Between Vertex and Kymera

Vertex:

• will pay Kymera $70 million upfront, including an equity investment in the company.
• has the option to exclusively license molecules against the designated target. 
• will pay tiered royalties on future net sales on any products that may result from this collaboration.

Kymera:

• will conduct research activities in multiple targets under the collaboration.
• is also eligible to receive more than $1 billion in potential payments, based upon successful achievement of specified research, development, regulatory and commercial milestones; for up to six programs optioned as part of the collaboration.
• is expected to receive, from Vertex, tiered royalties on future net sales on any products that may result from this collaboration.  

About Kymera Therapeutics

Kymera Therapeutics is a private biotechnology company having a new transformative approach to treating previously untreatable diseases. Kymera is advancing the field of targeted protein degradation; accessing the body’s innate protein recycling machinery to degrade, dysregulated, disease-causing proteins.

Pegasus™ is Kymera Therapeutics’ protein degradation platform created to improve the efficacy of targeted protein degradation; hence generating a pipeline of novel products for the treatment of previously undruggable diseases.   

Powered by Pegasus™, a game-changing integrated degradation platform. Kymera is accelerating drug discovery with an unmatched ability to target and degrade the most intractable of proteins and advance new treatment options for patients.

Prohost Observations

Vertex is a Prohost pick that occupies a place among the Top-Tier biotech and biopharmaceutical firms in the Prohost Portfolio. We picked this firm on March 18, 2011 at $44.39. The stock closed yesterday at $172.37, UP $3.25. The gains were 1.92% for the day.

Recently, like many outperforming biotech and biopharmaceutical companies, VRTX has been subjected to frequent unwarranted selloffs every now and then. We call the selloffs unwarranted because we believe that Vertex, like many of our top-tier picks, is undervalued. The biotech firms, which are experiencing selloffs every other day since the beginning of 2019, are those that are making it possible to treat: previously untreatable deadly diseases, undruggable life-threatening diseases and diseases with previously unknown pathways. Their pipelines are wealthy with products and future treatment possibilities.  

Vertex’s Product Revenues 

• Vertex’s product revenues increased 34% compared to the first quarter of 2018. Driven by the uptake of Symdeco in the U.S. since launch.

GAAP and Non-GAAP Net Income 

• GAAP and Non-GAAP net income increased compared to the first quarter of 2018, driven by the strong growth in total product revenues.

Cash

• Cash equivalents and marketable securities were $3.5 billion as of March 31, 2019. An increase of approximately $300 million compared to $3.2 billion as of December 31, 2018.

Vertex’s Recent Good News Included the Following:

• An FDA extension of the approval of Vertex’s cystic fibrosis drug  Kalydeco^® (ivacaftor) for children with cystic fibrosis (CF); ages six months to less than 12 months who have at least one mutation in their cystic fibrosis transmembrane conductance regulator (CFTR) gene that is responsive to Kalydeco.  

Kalydeco is approved in the U.S., Canada and the EU for the treatment of CF in patients ages 12 months and older. Physicians have started to treat the underlying cause of CF in eligible infants as young as six months, which enlarges the market.

• An approval  from the Australian Therapeutic Goods Administration (TGA) of  Symdeco^® (tezacaftor/ivacaftor and ivacaftor) for CF in people aged 12 years and older who are homozygous for the F508del mutation or who have at least one mutation in the CFTR gene that is responsive to tezacaftor/ivacaftor.

Another magnification of Vertex’s cystic fibrosis market.    

• The FDA  has granted Vertex’s and CRISPR Therapeutics Fast Track Designation for CTX001 for the treatment of transfusion-dependent beta thalassemia (TDT). CTX001 is an investigational, autologous, gene-edited hematopoietic stem cell therapy for patients suffering from severe hemoglobinopathies.

This news could have a very positive impact for both firms.

Finally, we view the recent collaborating agreement with Kymera Therapeutics as good news for Vertex. The capability of protein degradation, that Vertex will be gaining from the agreement, will enable it to treat diseases that do not respond to current targeted or non-targeted treatments. They are numerous.

Vertex has indeed made a good decision. 

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