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Ex-executive says Vertex made him go

Suit seeks severance benefit for lost duties

When Vertex Pharmaceuticals Inc. senior vice president Dr. N. Anthony Coles resigned two years ago, the Cambridge biotech company said he left to take another job.

But in newly filed court documents, Coles says he was shoved out the door.

In a lawsuit filed in Suffolk Superior Court, Coles, 47, says he was stripped of some of his key responsibilities in 2005 when Vertex hired another executive, spurring him to start job hunting.

He's seeking a golden parachute worth hundreds of thousands of dollars, or more.

The suit underscores how challenging it can be for emerging companies to keep top executives happy when they bring in new talent and shuffle responsibilities.

It also provides access to the kind of corner-office politicking that is typically played out behind corporate doors.

Vertex, founded in 1989, is developing several drugs, including a promising treatment for hepatitis C. It has more than 1,000 employees, including 800 in Cambridge. The company re ported $38 million in revenue last quarter and a loss of $118 million.

In March 2002, Vertex hired Coles as senior vice president for commercial operations and pharmaceutical products.

Coles, previously a research fellow at Harvard Medical School and a vice president at drug maker Bristol-Myers Squibb, came on board with a starting salary of $325,000, a $55,000 signing bonus, a forgivable loan of $250,000, plus stock options and other benefits.

Over the next few years, Coles received raises, six-figure annual bonuses, and increasing responsibility, according to his lawsuit.

In November 2003, he was given the additional title of head of global corporate and business development.

But in February 2005, Vertex's chief executive, Joshua Boger, and president Vicki L. Sato told Coles that a new hire, Dr. Victor A. Hartmann, would assume the business and corporate development duties.

Coles said he complained to Boger that the move was a demotion and started talking to him about taking on another substantial role at Vertex. But when nothing materialized, Coles contends, he had no choice but to look for a job elsewhere.

"The removal of these responsibilities constituted a material reduction in Dr. Coles's authorities, duties, and responsibilities," Coles's legal complaint says.

Vertex declined to comment. Coles did not respond to a request for comment.

In court papers, however, Coles said he did not quit immediately after his demotion because he thought Vertex would offer him a new role and he "wanted to protect Vertex from the appearance of turmoil within its management ranks."

He resigned in November 2005, after winning a job at NPS Pharmaceuticals Inc., a smaller publicly traded biotech company now based in Parsippany, N.J., where he is chief executive.

NPS paid him $481,000 in salary last year, plus stock options and restricted stock that the company estimated could potentially be worth more than $1 million, according to documents NPS filed with the Securities and Exchange Commission.

Now, two years later, Coles is demanding severance pay from Vertex, including a year's salary, 18 months of company benefits, and the value of additional stock options that he says should have vested. The suit didn't estimate how much those options could be worth.

In a letter to Coles's attorney in January 2006, Vertex general counsel Kenneth S. Boger said the decision to modify Coles's responsibilities was hardly tantamount to terminating him without cause and, therefore, did not trigger the severance clause in his employment agreement.

"Vertex is a relatively early stage company, and in that context, it would not be unreasonable to suppose that supplemental job responsibilities might be allocated and reallocated among the comparatively small senior executive group," wrote Boger, who is Joshua Boger's brother.

Moreover, Kenneth Boger scoffed at the claim Coles quit because of his reassignment. Boger suggested Coles resigned after realizing he was unlikely to be promoted to president.

When president Vicki Sato retired in 2005, Vertex gave the president's title to Joshua Boger, the chief executive, instead of hiring a replacement.

"I congratulate Dr. Coles on having obtained a position with a fine company that is more in line with his career objectives," Kenneth Boger wrote to Stuart M. Cable, who was then serving as Coles's lawyer at Goodwin Procter LLP.

"I share the view of a number of people affiliated with Vertex that the wisest counsel Tony could receive would be to let this matter drop and get on with the promise of his new position."

Todd Wallack can be reached at twallack@globe.com.

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