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Mid-size biotechs making their way

By Robert Weisman
Globe Staff / October 23, 2011

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With a flurry of new drug applications filed or approved recently, some promising Boston area companies have been moving from research to commercialization and emerging as more formidable players on the local biotechnology scene.

Vertex Pharmaceuticals Inc., the fast-growing Cambridge company, is leading the way. In May it won Food and Drug Administration approval to market a new tablet to treat hepatitis C. And last week the company, which is building a new headquarters on the South Boston Waterfront, filed an application with the FDA for a cystic fibrosis drug.

Two other Cambridge biotechnology companies, Ariad Pharmaceuticals Inc. and Ironwood Pharmaceuticals Inc., are following close behind. Both are awaiting FDA approval of maiden therapies - Ariad’s for sarcomas, Ironwood’s for irritable bowel syndrome. Like Vertex’s hepatitis C drug, both treatments have the potential to be blockbusters, meaning they could generate annual sales of at least $1 billion.

Another area company, Curis Inc. of Lexington, is waiting for the agency to sign off on its treatment for advanced basal cell carcinoma. Several others are close behind. For example, Lexington’s Cubist Pharmaceuticals Inc., which markets an antibiotic, has two drugs in late-stage development and next year plans to move a third one into that phase - the last step before filing a new drug application.

“You’re seeing a maturation of the local life sciences industry,’’ said Kenneth I. Kaitin, director of the Tufts Center for the Study of Drug Development in Boston, a nonprofit research group. “There are new companies being formed all the time. But this is the first wave of this new generation of companies that have gotten far enough to see their products reaching the marketplace.’’

The modest boom is especially welcome because the state’s biopharmaceutical industry seemed to be evolving in recent years into two tiers: a small roster of giant players, such as Genzyme Corp. of Cambridge (purchased last spring by France’s Sanofi SA) and Biogen Idec Inc. of Weston, and a larger group of venture-backed start-ups scrambling to strike partnerships with global drug makers, such as Sanofi and Switzerland’s Novartis AG, that have set up research shops in the area.

Companies such as Vertex, Ariad, and Ironwood could represent a new tier of mid-size biotechs with operations ranging from drug discovery to marketing and sales.

“It’s going to change the makeup of the Boston-Cambridge industry to have companies that have moved beyond research into the commercial stage, which is exactly what you want,’’ said Harvey J. Berger, chief executive of Ariad, which expects to double its workforce of 135 by 2013. “We are absolutely committed to keeping the company in the Boston-Cambridge area.’’

Large or mid-size biotechs with local headquarters have become rare commodities. Many with local roots have been bought by overseas companies over the past decade, though they still maintain a robust research and commercial presence here.

They include Millennium Pharmaceuticals of Cambridge, now owned by Japan’s Takeda Pharmaceutical Co.; EMD Serono of Rockland, owned by Germany’s Merck KAaG; Transkaryotic Therapies Inc. of Cambridge, owned by Ireland’s Shire PLC (which now operates a major division in Lexington); and, Alkermes PLC of Waltham, which recently bought Ireland’s Elan Drug Technologies and moved its corporate headquarters to Dublin. Alkermes last fall won FDA approval to market its alcoholism drug as a treatment for opiate addiction.

With each regulatory win, and even in anticipation of drug approvals, companies that have typically spent a decade or more focusing on research and development must transition into full-service companies with functions such as manufacturing, marketing, sales, and patient outreach. They also have to convince health care providers who will prescribe their products, and insurers who will pay for them, that they are worth the expense. That means hiring new leadership and building expertise in unfamiliar areas.

“That’s an inflection point, for sure, shifting from R&D to commercial,’’ said Joseph V. Ferrara, president of consulting firm Boston Healthcare Associates Inc. “They have to understand who’s at financial risk for the adoption of their technology or drug and develop evidence to support its value. Part of it’s clinical and part of it’s economic.’’

The larger the potential market, the more commercialization efforts can be aided by alliances with larger partners who can provide funding for research and are more experienced in sales or know more about European or Asian markets. Ironwood, for instance, is collaborating with New York’s Forest Laboratories Inc. in the US market and with Almirall SA of Spain in Europe.

“We’re looking at one of the few opportunities to build a primary sales category that’s happened in some time,’’ said Peter M. Hecht, chief executive of Ironwood, which started the year with 215 employees and expects to end it with more than 275. “We’ve been preparing for a commercial launch and becoming a commercial company for some time now. You go from having no products to what could be a billion-dollar category of products in no time.’’

The new drug application for Ariad’s treatment was filed by its partner, Merck & Co. of New Jersey, which will comarket the drug in the United States and market it alone in Europe, while the application for the Curis drug was filed by its partner, the Genentech division of Swiss drug maker Roche AG.

But the innovation behind the drugs came from scientists and researchers in small Massachusetts labs - a pattern that has become commonplace in the industry.

“A lot of the creativity in chemistry and biology has migrated to the smaller companies,’’ said Vertex president Matthew Emmens. “There’s a focus, but there’s a freedom to take risks.’’

Robert Weisman can be reached at weisman@globe.com.