Vertex Pharmaceuticals (NASDAQ:VRTX) announced on Tuesday morning that it's entering a new partnership with a privately held Skyhawk Therapeutics, a biotech focused on discovering small-molecule drugs that can treat disease by modulating RNA splicing.
Vertex's cystic fibrosis franchise is generating large and growing cash flows right now, but this isn't a company that waits until it can see financial trouble brewing to start seeking out new revenue streams. In fact, Vertex's first drug to produce over $1 billion in annual sales was an antiviral treatment for hepatitis C that it had to abandon years ago.
In this heavily backloaded deal, Vertex will pay Skyhawk $40 million upfront and up to $2.2 billion in potential milestone payments. Vertex is clearly prepared to license multiple new drug candidates from Skyhawk, but neither company disclosed what diseases those drugs would target.
Skyhawk Therapeutics is one of several young biotechs that apply an RNA-splicing technique to dysfunctional genes. This is a relatively simple way of giving a patient's cells the ability to produce vital proteins without altering the dysfunctional genes themselves.
Splicing RNA to treat severe diseases has already demonstrated real-world potential. In August, an RNA-splicing treatment called Evyrsdi from PTC Therapeutics (NASDAQ:PTCT) and Roche (OTC:RHHBY) earned FDA approval to treat spinal muscular atrophy.
Earlier this year, Merck (NYSE:MRK) expanded its collaboration deal with Skyhawk Therapeutics to include the discovery of potential new treatments for autoimmune and metabolic diseases. Merck didn't disclose how much it paid Skyhawk upfront, but the big pharma could make up to $600 million in milestone payments for each candidate that moves forward.