Presentation on theme: "OPIM 5894 Advanced Project management Vertex Pharmaceuticals: R & D Portfolio Management Team 3 Richard Buskey Jonathan Weiss Daniel Mahzonni Prashant."— Presentation transcript:
OPIM 5894 Advanced Project management Vertex Pharmaceuticals: R & D Portfolio Management Team 3 Richard Buskey Jonathan Weiss Daniel Mahzonni Prashant Mishra Vijay Gadigeppa Jonathan Koenig
Vertex Pharmaceuticals Which of the 4 projects portfolio options currently facing Vertex do you favor? VX-148 – PROS It had the potential to treat a number of important diseases with unmet medical needs such as psoriasis, multiple sclerosis and even cancer Market is established; psoriasis drugs already exist Remaining development costs = $100 mill. Already in Phase II – CONS More competitors in the market
Vertex Pharmaceuticals VX-702 – PROS Cheap and easy to make 75% of the drug stays in the system for therapeutically attractive periods. There are manageable side-effects Oral drug instead of injectibles Supported by management – CONS Prone to toxicities Many companies had tried without success High mechanism risk
Vertex Pharmaceuticals VX-765 – PROS As a small molecule, VX-765 could be taken orally and was thus thought to have excellent market potential VX-765 was fully owned by Vertex; Believed to play an important role in chronic inflammatory diseases Largest potential for sales and profit margins Completed the Phase I – CONS High production costs Uncertainty with the Dosages If Vertex went ahead with another ICE inhibitor, with respect to pralnacasan (VX-740) it would – lose rights to a subsidized sales force in US/Europe and – sacrifice certain financial benefits of copromotion
Vertex Pharmaceuticals VX-950 – PROS Billion $ drug Current treatments for the disease were only effective in roughly 40% to 60% of chronically ill HCV patients. Most of these treatments were associated with significant side effects and none was a direct antiviral therapy. Potential for a significant breakthrough leading to boosted image. Sell the drug to doctors thru’ a specialty sales force. – CONS VX-950 was complex and costly to make. For regulatory and medical ethical reasons, the company would be required to test VX-950 in combination with α-IFN. Acquiring adequate supplies of α-IFN significantly increased the cost of testing VX-950. Decreasing number of new infections. Long Time to market (YR 2010)
Vertex Pharmaceuticals Decision: – Top 2 Products: VX-148 and VX-702, since they were in Phase II. – Keep VX-765 and VX-950 as backup OR keep VX-765 as backup and partner with some other company for VX-950 since it was involved higher costs.
Vertex Pharmaceuticals Specifically, which 2 projects would you advance in development? Why? Show analysis. CandidateIndication Phase I Success Phase II Success Phase III Success Approval Success Probability SuccessProbability Fail 1VX-148Psoriasis100.0%40.0%65.0%75.0%19.5%80.5% 2VX-702ACS100.0%60.0%50.0% 15.0%85.0% 3VX-765RA/OA80.0%60.0% 75.0%21.6%78.4% 4VX-950HCV70.0%50.0%75.0%80.0%21.0%79.0% Candidate Choice Both SuccessfulBoth Failing One Succeeding Overall Success %68.4%28.7%31.6% %63.1%32.7%36.9% %63.6%32.3%36.4% %66.6%30.1%33.4% %67.2%29.7%32.9% %61.9%33.5%38.1%
Vertex Pharmaceuticals Would you license out the two others not chosen or keep them as backup? – Keep VX-765 as backup and partner with some other company for VX- 950 since it was involved higher costs. – VX-765 is in Phase I, highest remaining dev costs, highest potential peak sales – VX-950 is in pre-clinical stage; the company would be required to test VX-950 in combination with α-IFN. Acquiring adequate supplies of α- IFN significantly increased the cost of testing VX-950.
Vertex Pharmaceuticals How much should Vertex management rely on quantitative methodologies (such as real option valuation) versus qualitative approaches? – Qualitative Approach has higher buy-in – Quantitative Analysis is based on expert assumptions with all products having a high likelihood of failure. – Boger would need Information on the existing products in the market and their comparison to the drugs in question May need insight into the adverse events on VX-148 and VX-702 which are already in Phase-II Significance of the results from Phase-I for the products