Jumping into growing queue of buyers, Vertex chief targets a slate of new and 'larger' deals ahead
After making it crystal clear that Jeff Leiden plans to keep his hand directly on the wheel of business development following his move from CEO to the executive chairman’s spot, Leiden himself stepped up on Wednesday to personally map out plans for a series of new deals he expects to orchestrate to beef up the pipeline.
During the Q2 call with analysts, Leiden heralded the near-term approval expected for their triple combination for cystic fibrosis. And he made it abundantly clear that a string of new deals regarding gene editing programs for Duchenne muscular dystrophy — buying Exonics and more — are just a prelude to more M&A pacts in the very near future as Reshma Kewalramani preps a move to the CEO suite.
Right at the intro, Leiden noted:
These agreements provide us with development candidates that have shown promising preclinical results and also enable us to integrate cutting-edge scientific technology and expertise in diseases that are highly aligned with our business strategy. We plan to execute more of these types of fields as we further expand our pipeline of transformative medicines over the coming months and years.
In highlighting his continued presence in the day-to-day operations, Leiden spelled out his role in “business development, helping to get deals done and secure our access to external innovation in products.”
In the Q&A, Leiden was explicit that Vertex’s cash flow position gives them plenty of firepower for doing more, and larger deals ahead, after spending $600 million over the past 12 months. What they won’t do, though, is buy up commercial or late-stage programs closing in on an approval.
As we said before, first of all, we are accumulating significant financial firepower capital in our balance sheet, and so you should expect to see us do more deals and potentially larger deals. But the strategy will remain the same as it’s been for the last four years. And as you know, we focus on three areas. Anything in CF that could be complementary or were additive to what we’re doing now is triple. Obviously, we’re not seeing any of those because the triple has set such a high bar, but we continue to look at everything out there.
The second one is technologies — our technology platforms that would allow us to better treat the kinds of diseases which you’ve heard about today either alone or potentially in combination with small molecules. And you’ve seen us do the CRISPR deal, the Moderna deal, the Arbor deal, the X-Chem deal, all of those fall into that category.
And then the third area is looking for assets mostly preclinical and early clinical assets that will complement our pipeline in the diseases we’re interested in. In a way, Exonics was a part of that because DMD and DM1 are two diseases we’re interested in and we continue to look for those assets.
Vertex’s decision to go after deals comes during one of the busiest M&A seasons we’ve seen in years, with a host of major players opening up their checkbooks to buy new drugs for the pipeline. Most, Like Vertex, are focused clearly on early and mid-stage assets, where they hope to find a few relative bargains in the R&D bin. In just the last few days we’ve seen Daniel O’Day at Gilead as well as Albert Bourla at Pfizer highlight their interest in more deals. So he’ll have plenty of company at the bargaining table. All of this will also continue to feed into the venture cycle that’s been seeing more and bigger funds come along to back startups.