Vitae Pharmaceuticals links up with Boehringer Ingelheim for 2nd R&D area

Often, what is billed as a $300 million strategic partnership between Big Pharma and a small drug developer winds up in an amicable split years down the road with substantially less cash having changed hands.

While large drug companies continue to cast their nets to scoop up promising compounds in the hope of replacing sales lost to generic competition, it's far from a frenzy. And they're quick to cut off support to emerging pharmaceutical or biotechnology firms whose therapies fail in the clinical or regulatory process.

That's what makes yesterday's announcement by Fort Washington's Vitae Pharmaceuticals Inc. and Germany's Boehringer Ingelheim so interesting. The two agreed to team up on new treatments for Alzheimer's disease.

Boehringer Ingelheim, one of the world's 20 biggest drug companies, will pay $42 million up front to Vitae, which has 50 employees in Montgomery County. Plus, Vitae could get an additional $200 million in milestone payments. That's "maybe money" dependent on reaching clinical targets and regulatory goals.

So why get excited about a $42 million deal? Because it's the second such deal between Vitae and Boehringer. In October 2007, the two agreed to collaborate on new medicines to treat diabetes. The bigger company paid $36.5 million up front and promised $300 million more.

While other CEOs worry about their companies' cash burn rates, Vitae CEO Jeffrey Hatfield can boast of a "cash runway extending multiple years forward."

Add those partnerships to a $13 million loan Vitae got last fall and the $75 million in equity attracted from venture capital firms, and we're talking some real money.

As necessary as capital is, however, the clinic is where the drug development game is won and, more often, lost.

So while Vitae has played moneyball very well, it will enter a new arena later this year when it begins Phase 1 testing on a compound, called a renin inhibitor, to treat high blood pressure.