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Vertex to get new investment from Cystic Fibrosis Foundation

Vertex’s Orkambi drug for cystic fibrosis costs $259,000 per patient annually.Vertex Pharmaceuticals

Vertex Pharmaceuticals Inc. will receive an upfront payment of $75 million and additional payments of up to $6 million a year for the development of new cystic fibrosis medicines under an amended research agreement with the Cystic Fibrosis Foundation.

Boston-based Vertex disclosed the revised deal in a regulatory filing Friday. The foundation has been collaborating with Vertex since the early 2000s. It has previously invested a total of $120 million to help the Boston biotech company bring to market a pair of groundbreaking treatments, sold under the brand names Kalydeco and Orkambi, for the obstructive lung disease.

The nonprofit foundation also negotiated lucrative royalties on the sale of those drugs. In November 2014 it sold its royalty rights to a New York investment firm, Royalty Pharma, for $3.3 billion, one of the largest financial payouts ever for a charitable organization.

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Some of the foundation’s new funding of Vertex was committed as part the parties’ original agreement, and some is new, foundation spokeswoman Laurie Fink said in an e-mail. She said the revised pact gives the foundation “the potential to receive future royalty streams” if experimental drugs in the Vertex pipeline are eventually approved by regulators.

The new terms spell out a range of royalty rates, giving the foundation lower rates for compounds created after Feb. 28, 2014. It also clarifies how royalty payments are calculated for Vertex’s so-called combination therapies made up of more then one drug.

“This underscores this longstanding and very productive relationship we’ve had with the Cystic Fibrosis Foundation,” said Vertex vice president Dawn Kalmar. “By expanding and amending this agreement, we’re supporting our shared goal of discovering new medicines for people with CF.” Kalmar said the revised deal also gives Vertex access to the foundation’s patient data to help scientists understand the progression of the disease.

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Critics of the foundation have said it failed to pressure Vertex to keep the prices of its CF medicines low for patients because it benefits from higher royalties.

Orkambi, which treats patients with the most common CF-causing genetic mutation, costs $259,000 per patient annually. Vertex paid its chief executive, Jeffrey M. Leiden, total compensation of $28.1 million last year and earlier awarded him a potential one-time retention bonus valued at $14.9 million.

On Friday, one critic questioned whether the foundation should still be underwriting Vertex’s research now that the company has begun to turn a profit.

“It seems a little strange to me that they’re having to support Vertex, given the cost of its drugs and the multimillion-dollar compensation packages it pays its executives,” said Paul Quinton, a cystic fibrosis researcher at the University of California in San Diego who has the disease.


Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.