How Eli Lilly Let a Billion-Dollar Molecule Slip Away and Make a Fortune for Vertex

8/4/10

Careers can be made in the drug development business on a single drug like telaprevir, the hepatitis C treatment from Vertex Pharmaceuticals (NASDAQ:VRTX). If it gets approved, the drug has the potential to become a leading treatment for the chronic liver disease—and to make a multibillion-dollar fortune for Cambridge, MA-based Vertex—within the next few years.

So it’s a bit of shocker to people when they find out that the pharmaceutical powerhouse Eli Lilly (NYSE:LLY), which collaborated with Vertex to discover telaprevir, gave away almost its entire stake in the drug back in December 2002. Indianapolis-based Lilly began working with the smaller Vertex to discover drugs for hepatitis C virus in 1997, and telaprevir emerged as the two companies’ lead compound in the program in 2001.

Jump ahead to this spring. Vertex, which has West Coast operations in San Diego, reported in May that telaprevir passed a pivotal test, curing three out of four patients with the disease in a Phase III clinical trial, a major hurdle in its bid to gain FDA approval of the drug. The drug, known as a protease inhibitor, is considered by some a breakthrough because it has shown that it can cure patients at the twice the rate of existing therapies. Company executives say they hope to garner permission to begin sales of the drug in 2011.

While those results have helped Vertex build up a $7 billion market capitalization, hardly anybody remembers who could have been its early collaborator. Lilly played a key part in developing and funding early research of the drug, which analysts now project could become a $2 billion annual seller in the U.S. alone within two years of its potential launch. It’s a decision that Lilly has to regret, given that telaprevir’s potential has made Vertex the third most valuable biotech company based in Massachusetts, behind only Genzyme (NASDAQ:GENZ) and Biogen Idec (NASDAQ:BIIB).

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  • http://telapravir Joanna Scarsella

    I cannot wait until this medicine comes out! I am excited and you have given me HOPE that I might actually defeat Hep-C that has been killing me for years.

  • Stephen Randolph

    It’s about time!!! I wish the fda would get off their butts and get this drug going. I have had hep c since 1984 and it is a lot of fun having it. Mr doctor tells me 06/11 it will be available but that is not soon enough for me. Let me try it now before any further damage is done. What is the worst thing that could happen to me…..the drug does not work so I think I should be the option to take it now or not.