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Boston Capital

Hope is in the pipeline

By Steven Syre
Globe Columnist / March 4, 2011

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People who suffer from relatively rare diseases deal with some cold facts of life. Among other things, they know pharmaceutical companies hate the idea of expensive, high-risk drug development that may help thousands — not millions — of patients. The odds, the cost, and the size of the potential payoff don’t add up.

That makes some recent news from Vertex Pharmaceuticals Inc. all the more remarkable. The Cambridge biotech company, best known for its potential blockbuster treatment for hepatitis C, now awaiting government approval, reported very promising test results on another treatment for some cystic fibrosis patients. That drug, still known by its lab name VX-770, is one of two cystic fibrosis treatments it has in development.

Cystic fibrosis is one of those relatively rare but deadly diseases, affecting about 30,000 Americans and 70,000 people worldwide. The inherited illness leads the body to produce thick mucus that clogs lungs. Patients generally lose about 2 percent of their lung capacity each year.

Both Vertex drugs are products of a financing concept known as venture philanthropy, and may turn out to be its greatest success. The treatments, though still in development, probably wouldn’t exist at all if the Cystic Fibrosis Foundation didn’t begin funding work on them more than a decade ago.

The foundation had offered to help drug companies get development projects going by investing with them at the riskiest early stages. It shares royalties if a project succeeds and eats the loss if it does not. It has invested $260 million to kick-start commercial drug development overall, and sunk $76 million into the two Vertex treatments alone.

Lots of other foundations supporting patients with relatively rare diseases — and some with much more common medical problems — use similar financial strategies to help develop treatments today. But venture philanthropy was a novel strategy when the Cystic Fibrosis Foundation decided to give it a try in 1998.

“What we did was done out of necessity,’’ says Robert Beall, chief executive of the foundation. “We weren’t getting the attention of the biopharmaceutical industry. We were a small disease, and it was risky to get involved with genetic diseases on top of that.’’

The foundation did two things to pursue the venture philanthropy strategy. It organized a network of doctors and institutions that could be used to carry out clinical trials of potential new treatments. Then it raised about $25 million, most of it coming from the Bill and Melinda Gates Foundation.

The foundation started looking for commercial partners, and began working with Aurora Biosciences, a California company with particular technical expertise to search for drugs that could help cystic fibrosis patients. The company was later acquired by Vertex, which agreed to continue the work.

“What the foundation brought to us was a long-term vision to get at the core of this disease with drugs, and that became our vision too over time,’’ says Paul Negulescu, the original program leader for cystic fibrosis at Aurora Biosciences.

But the foundation didn’t put all its eggs in one basket. It raised more money and began investing with other drug companies on a variety of projects. Boston businessman Joe O’Donnell, whose son died from cystic fibrosis, led a capital campaign that raised $175 million for the foundation and is about to lead a second fund-raising effort.

“We just sold hope, and did it the old-fashioned way,’’ says O’Donnell.

The foundation’s investments helped develop a pipeline of prospects and some products available today, though all the current drugs treat only symptoms of cystic fibrosis.

The Vertex drugs are different. They strike at the heart of the disease. That’s why good news on VX-770, though it would only help about 4 percent of cystic fibrosis patients, has boosted Vertex stock 30 percent since Feb. 22.

A study found the drug improved breathing and slowed other symptoms by attacking a genetic defect.

“We’ve had some successes, but this is a major milestone,’’ says Beall. “We’re talking about theoretically adding decades onto the lives of patients.’’

It’s worth emphasizing the “theoretical’’ element to this story. It’s still about potential. But the payoff from venture philanthropy may help cystic fibrosis patients in ways that wouldn’t have been possible otherwise.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.