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Vertex To Buy Biotech For $950M, For Type 1 Diabetes Cure

Vertex said Tuesday it will pay $950 million in cash for a preclinical biotech researching a cure for Type 1 diabetes.Since its 2014 founding, Semma Therapeutics has worked on a stem cell-based therapy for Type 1 diabetes, publishing preclinical proof-of-concept data earlier this year. Semma’s drug-device combination aims to restore insulin secretion by producing large quantities of pancreatic beta cells, while using a device to protect those cells from an immune response. In Semma, Vertex sees “a substantial opportunity” to change how Type 1 diabetes is treated, company CEO Jeffrey Leiden said in a Sept. 3 statement. The companies expect the deal to close by year’s end, after which Semma will become an operating subsidiary of Vertex.

Acquiring Semma gives Vertex an immediate, albeit preclinical, presence in diabetes.

David Altshuler, the chief scientific officer for Vertex, said the private biotech’s approach could address the causal human biology of Type 1 diabetes.

The prospect of solving diabetes has helped Semma advance its science through preclinical stages. In November 2017, the company raised $114 million in a Series B round, with high-powered funders including Novartis and Medtronic.

Novartis veteran Bastiano Sanna took over as Semma’s CEO in May 2018 and will join Vertex as Semma’s president. Douglas Melton, the company’s scientific founder and co-director of the Harvard Stem Cell Institute, will continue to chair Semma’s scientific advisory committee following the acquisition.

Semma has two preclinical products: stem cell-derived pancreatic islet cells and a device designed to protect those cells without using immunosuppressant treatment.

For Vertex, the deal comes as the biotech preps for a major leadership change. Leiden is set to step down as CEO in about six months, with R&D head Reshma Kewalramani taking over the leadership role. Leiden plans to serve as Vertex’s chairman into 2023 and will continue to oversee several areas, including business development, until then.

In July, Leiden told investors to expect Vertex to “do more deals, and potentially larger deals.” Acquiring Semma appears to check that box, and follows a buyout of the private Exonics this summer.

Vertex earlier this year listed five emerging disease areas it planned to focus on: Alpha-1 antitrypsin (AAT) deficiency, pain, sickle cell disease, beta thalassemia and certain kidney diseases. Through Semma, this deal appears to add another area to that list.

But the deal could also go beyond Type 1 diabetes, Cantor Fitzgerald analyst Alethia Young wrote in a Tuesday note to investors.

“​We think this is a platform deal that likely has implications beyond Type 1 diabetes in the long term,” Young wrote.

“Vertex is acquiring both a stem cell manufacturing process and a novel delivery system via the device. Vertex plans to focus on this initial opportunity over the next 3-5 years, but could see this device having applications in other diseases and with other cell types such as hepatocytes.”