Transactions include debt financing and the sale of rights to European approval milestones.
Vertex Pharmaceuticals entered two deals that will give it $155 million in cash related to the potential clinical success and commercialization of its lead hepatitis C drug, telaprevir, in Europe. While the firm anticipates ending the year with about $800 million in cash, it also increased its net-loss guidance.
In the first transaction, the company is selling its debt that must be paid back by October 31, 2012, for $120 million in cash. The notes are secured by $155 million in success-based payments that Vertex is eligible to receive from Janssen Pharmaceutica. The milestones are linked to filing, approval, and launch of telaprevir in Europe.
Separately, Vertex will receive roughly $35 million in cash for the sale of rights to an additional $95 million in future milestone fees tied only to the launch of telaprevir in Europe. Vertex is not obligated to repay the approximately $35 million to the buyers if the milestone events are not achieved.
Of the $250 million in milestones, $100 million is linked to regulatory filing and approval in Europe and the rest relates to launch of telaprevir in Europe.
Vertex’ collaboration with Janssen is otherwise unchanged by today’s deals. The company remains eligible to receive a royalty on future product sales in Janssen’s commercial territories including the European Union. Vertex retains exclusive commercial rights to telaprevir in North America.
Vertex now expects to end 2009 with approximately $800 million of cash, cash equivalents, and marketable securities. The company expects its fiscal 2009 GAAP loss to be approximately $650 million. The increase results primarily from the decision to retain VX-509 for Phase II clinical development in inflammatory diseases.