We are collaborating with Tibotec, a Janssen (Johnson & Johnson) company headquartered in Mechelen, Belgium, to develop and commercialize our investigational hepatitis C virus (HCV) protease inhibitor telaprevir (VX-950). Under the agreement, Janssen will have exclusive rights in Europe, South America, the Middle East, Africa and Australia. Vertex received an upfront payment of $165 million and to date has received $30 million of a potential $380 million in milestones based on successful development and launch of telaprevir in the Janssen territories. Vertex and Janssen also share development costs for telaprevir. The agreement also includes a royalty on product sales in Europe and other territories outside of North America and the Far East. Vertex retains commercial rights in North America and continues to lead the global development plan for telaprevir.

In March 2006, Vertex and Cystic Fibrosis Foundation Therapeutics, based in Bethesda, Maryland, entered into a new collaboration to accelerate clinical development of VX-770, a novel, oral drug candidate for the treatment of cystic fibrosis (CF). CFFT is a non-profit, donor-supported drug discovery and development affiliate of the CF Foundation. Vertex initiated its CF research program in May 2000 as part of a collaboration with CFFT, and expanded the agreement in May 2004. In addition, Vertex and CFFT entered into an expanded research collaboration in January 2006 to discover novel compounds known as correctors, which may work by increasing the number of CFTR channels on the cell surface.

VX-770, an investigational oral potentiator, is designed to act directly on the malfunctioning CFTR protein to help restore the balance of salt and water. VX-770 was advanced into preclinical development based on successful collaborative research with Cystic Fibrosis Foundation Therapeutics, Inc. (CFFT) that incorporated capabilities and proprietary ion channel research from Vertex's San Diego research site.

Vertex is conducting a Phase 2a trial to evaluate, in 39 patients, the safety and pharmacokinetics of VX-770, and how VX-770 affects biomarkers of the cystic fibrosis transmembrane conductance regulator (CFTR) protein in CF patients who have a specific type of CFTR mutation known as G551D. In March 2008, Vertex announced interim results from Part 1 of this Phase 2a trial and in October 2008, Vertex announced interim results of Part 2 of this Phase 2a trial. Based on these results, Vertex intends to work with global regulatory authorities to finalize the design of a registration program for VX-770 targeted to begin in the first half of 2009. Click here for the October 20, 2008 press release updating the CF program.

Clinical development of VX-770 is currently focused on a subset of CF patients who have a specific type of CFTR mutation known as G551D that constitutes approximately 4 percent of the CF patient population in the U.S. Vertex also plans to evaluate VX-770 in patients with other mutations that result in malfunctioning CFTR on the cell surface.

VX-809, an investigational oral corrector compound, is Vertex's second investigational oral drug candidate for the treatment of CF. Corrector compounds such as VX-809 are designed to increase the amount of DF508-CFTR on the surface of cells lining the airway, which may result in an increase in chloride transport across the cell surface in patients with the DF508-CFTR mutation. Vertex is conducting two Phase 1 trials of VX-809. The first trial is a single and multiple dose study. The second is a single dose study examining the pharmacokinetics (PK) and safety of a solid dosage form of VX-809. Depending on the results from these Phase 1 trials, Vertex plans to initiate a single dose PK and safety trial of VX-809 in patients with CF by the end of the year.

In June 2004, Merck & Co., Inc. and Vertex entered into a global agreement to develop and commercialize Aurora kinase inhibitors, for the treatment of cancer. Merck and Vertex's collaborative efforts to develop Aurora kinase inhibitors are being led by researchers at Merck's R&D site in Upper Gwynedd, Pennsylvania. Merck initiated clinical development of the investigational Aurora kinase inhibitor, VX-689, in mid-2008.

Under the agreement, Merck is responsible for worldwide clinical development and commercialization of Aurora kinase inhibitors selected as part of the collaboration and will pay Vertex development milestones and royalties on product sales. In addition, the companies conducted a joint research program to characterize the activity of multiple Aurora kinase inhibitors across a broad range of cancer types as well as to identify drug candidates directed at Aurora kinases, using molecular profiling approaches and microarray technologies pioneered by Merck. As part of the agreement with Merck, Vertex received a $20 million upfront payment, an additional $14 million in research funding over the joint research program and more than $60 million in additional milestone payments.

Aurora kinases are key enzymes involved in the cell cycle and are implicated in the growth and proliferation of tumor cells in a variety of solid tumor cancers. As enzymes specific for and essential to cell growth and division, Aurora kinases hold the potential to be important control points for slowing the growth and spread of tumors. Aurora kinases are known to be overexpressed in a number of tumor types, including colon cancer, breast cancer, ovarian cancer and other cancers as well as in lymphoma and leukemia.

In June 2004, Vertex signed an agreement with Tokyo-based Mitsubishi Pharma Corporation to develop and commercialize telaprevir (VX-950), Vertex’s investigational oral protease inhibitor for the treatment of hepatitis C virus (HCV) infection, in Japan and certain Far East countries. As part of the agreement, Mitsubishi agreed to make pre-commercial payments to Vertex of up to $33 million to support clinical development of telaprevir (VX-950) through Phase II. Additionally, Mitsubishi will pay royalties to Vertex on commercial sales of VX-950 in Mitsubishi\'s territories. Janssen Pharmaceutica, a Johnson & Johnson Company, has exclusive rights to develop and commercialize VX-950 in Europe, South America, the Middle East, Africa and Australia. Vertex retains exclusive commercial rights to telaprevir (VX-950) in North America and continues to lead the global development for telaprevir (VX-950).