Vertex Pharmaceuticals will use gene-editing technology from CRISPR Therapeutics to discover and develop potential new treatments for cystic fibrosis (CF) and sickle cell disease, the companies said today. The collaboration will generate at least $105 million for CRISPR upfront—and possibly more than $2.5 billion in milestone payments.

CRISPR and Vertex said the initial focus of their strategic research collaboration will be on the use of CRISPR-Cas9 to potentially correct the mutations in the cystic fibrosis transmembrane conductance regulator (CFTR) gene, known to result in the defective protein that causes CF, and to edit other genes that contribute to the disease.

CRISPR-Cas9 has been hailed as the most significant genetic engineering advance in a generation, with CRISPR Therapeutics being one of several startup companies based on the technology. Yet CRISPR-Cas9 is at the center of a legal battle-royal over patent ownership, a dispute unlikely to be affected by the discovery of a new slicing protein for the genome-editing system.

CF is a key disease area for Vertex. The company is best-known for its franchise of CF treatments—a franchise the company expanded earlier this year by winning its second FDA product approval in July—a combination of the marketed Kalydeco® (ivacaftor) and lumacaftor (VX-809). That combination, marketed as ORKAMBI™, is the first medicine to treat the underlying cause of cystic fibrosis in people ages 12 and older with two copies of the F508del mutation.

Vertex’s expansion of its CF franchise has led to talk of being an attractive buyout candidate; the company appeared earlier this month on GEN’s List of Nine Takeover Targets of 2015.

The companies also said they will seek to discover and develop gene-based treatments for hemoglobinopathies, including sickle cell disease. For hemoglobinopathies, Vertex and CRISPR will equally share all research and development costs and sales, with CRISPR leading commercialization efforts in the U.S. For all other diseases, Vertex will lead all development and global commercialization activities.

Additional discovery efforts will be focused on a specified number of other genetic targets that will also be conducted under the collaboration, the companies said. Discovery activities will be primarily be carried out by CRISPR, with the related expenses to be fully funded by Vertex.

Vertex agreed to pay CRISPR $105 million upfront—of which $75 million will be paid in cash, and the remaining $30 million as an equity investment in the privately-held gene-editing company.

CRISPR is also eligible to receive future development, regulatory and sales milestones of up to $420 million for each of up to six CRISPR-Cas9-based treatments for which Vertex has agreed to license exclusive development rights. That adds up to $2.52 billion if CRISPR receives the maximum in milestone payments for all six treatments.

In addition, Vertex agreed to pay royalties on future sales.

“As a company founded on innovative science, we’re excited to begin this collaboration with CRISPR, as it puts us at the forefront of what we believe may be a fundamental change in the future treatment of disease—using gene-editing technologies to address the underlying genetic causes of many diseases,” David Altshuler, M.D., Ph.D., Vertex’s evp, global research and CSO, said in a statement.

CRISPR CEO Rodger Novak, M.D. added that, “For CRISPR, this collaboration validates the potential for gene editing in human therapeutics and provides important financial support for continued investment in our platform and proprietary pipeline of programs.”

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