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Vertex feeling growing pains
Firm scrambles for workers, space as drug shows promise
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By Todd Wallack, Boston Globe Staff, November 2, 2007
Over the past 18 years, Vertex Pharmaceuticals Inc. has grown to occupy space in eight buildings across Cambridge, including a former cow barn and another structure built on a site where Vertex employees once played roller hockey.
But it's not enough. As Vertex accelerates development of a high-profile treatment for the hepatitis C virus, the biotech company has embarked on the biggest hiring push in its history, forcing it to scout for even more space.
Since the start of 2005, Vertex has increased its Cambridge workforce by nearly two-thirds to about 850 employees, with almost 1,100 employees worldwide. It is aggressively trying to fill 100 additional openings - with hires coming on board virtually every week. Vertex executives are even considering building a campus in the Boston area.
The growth underscores the promise of Vertex's experimental hepatitis drug, telaprevir. Though telaprevir is still at least a couple of years away from being approved by regulators, the drug has shown enough potential that analysts believe it could become a blockbuster - generating $2 billion to $3 billion in annual sales. An estimated 170 million people worldwide are infected with the hepatitis C virus, which can destroy the liver, including 3.4 million in the United States.
"It should be a very big drug," said Howard Liang, an analyst with Leerink Swann & Co. of Boston. "This is one of the few cases in biotech, or maybe even pharma, where a drug has the potential to really change the standard of care."
So far in clinical trials, telaprevir has shown impressive results. Vertex plans to disclose today that more than 60 percent of patients who began treatment with telaprevir in combination with two existing medications showed no sign of hepatitis C in their blood 24 weeks after treatment (including people who stopped treatment early), compared to 40 to 50 percent with conventional drugs. That's despite the fact that conventional drugs normally require a year of therapy. Vertex plans to present the data in greater detail at a medical conference in Boston next week, the annual meeting of the American Association for the Study of Liver Diseases, which is being held at the Hynes Auditorium through Tuesday.
"It's the dawn of a new era" in hepatitis C treatment, said Dr. John Alam, Vertex's chief medical officer.
Vertex says it is in discussions with the Food and Drug Administration and European regulators to launch a broader, later-stage trial to confirm the safety and effectiveness of the drug. If all goes well, analysts believe Vertex could win approval to sell the drug in the United States by 2010.
But despite the drug's enormous promise, analysts note there is always the risk it could still stumble in clinical trials or during the FDA approval process. Vertex also faces competition from at least a dozen other companies working on their own hepatitis C medications.
In fact, Vertex's stock dropped two weeks ago after rival Schering-Plough Corp. revealed positive results for its hepatitis C drug, called boceprevir, which is also in midstage clinical trials. Both Vertex and Schering-Plough's drugs are protease inhibitors, which block a key enzyme the hepatitis virus uses to reproduce. They are designed to be taken three times a day in combination with two existing drugs.
Other companies working on hepatitis C treatments include Roche, Pharmasset Inc., Abbott Laboratories, Gilead Sciences Inc., and Novartis AG, though some are further along than others. Just yesterday, Enanta Pharmaceuticals of Watertown reported positive results in trials with rats and dogs for a potential hepatitis C drug that would only need to be taken once a day.
"It is a very hot area of research," said Cowen & Co. analyst Rachel McMinn, who recently downgraded Vertex stock to "neutral," because of the potential competition. "Once a target gets validated, everyone focuses on it."
Still, Liang, the Leerink analyst, said Vertex's latest clinical trial results are likely to be well received by physicians at next week's liver conference. And Liang noted Vertex is about to begin trials on another hepatitis treatment, called VX-500, which could prove to be even better than telaprevir.
In the meantime, Vertex is hiring. Though the company has long been respected for its chemistry and drug-discovery unit, it has never brought a drug to market itself. So, for the first time, Vertex must hire people skilled in manufacturing, marketing, later-stage clinical trials, and other areas of the drug business.
"We have had to build half of a company that we didn't have to have before," said Lisa Kelly, Vertex's senior vice president of human resources.
Under a collaboration deal with Johnson & Johnson signed last year, J&J's Janssen Pharmaceutica unit received the right to market telaprevir in Europe and other parts of the world, but Vertex retained exclusive North American rights.
Kelly said Vertex is trying a number of tacks to find new hires, including using outside recruitment firms, putting signs on taxis, advertising nationwide for talent, and offering employees $2,000 referral bonuses.
It has already conducted 1,000 interviews this year, but Kelly said she'd hire even more people if she could.
"It's tough because we are competing against a lot of big pharma companies," she said. "We are just not hiring fast enough. It doesn't mean we don't have the jobs."
Vertex chief executive Joshua Boger said he doesn't see the growth slowing anytime soon, forcing the company to add more office and lab space.
"Space is a happy problem," Boger said. "We need more space by the end of next year."
In the short run, he said, Vertex is likely to lease space in another building in Cambridge, just as it has done for years when it needed more room.
But as Vertex continues to expand, executives say they are also considering building a campus (or leasing an existing one) somewhere in the area to replace its current quiltwork of office space. The company currently occupies about 500,000 square feet scattered around Cambridge, in addition to having operations in San Diego and England.
Al Vaz, who oversees Vertex's facilities, said it could take a year or more to make a decision.
"We really haven't focused on one solution or the other," said Vaz, Vertex's vice president of facilities and operations. "It's hard to say because we are in such early planning stages."
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