Sunday, December 9, 2007

The Wall Street Journal Reports that ‘Big Pharma Faces a Grim Prognosis’- In what Form will it take its RNAi Pill?

As I am procrastinating about what to write in a review about the ‘Business of RNAi’, I have tried to get more into the heads of Big Pharma rather than seeing the world from the RNAi company’s point of view as I used to. In a nice front-page article of the Wall Street Journal this week (http://online.wsj.com/article/SB119689933952615133.html?mod=googlenews_wsj), Barbara Martinez and Jacob Goldstein vividly painted a dark portrait about looming patent expirations and generic competition, declining drug approval rates, and a research enterprise that has just gotten too bureaucratic to respond to the new pressures.

To go biotech, which is now producing many of the most innovative and high-margin drugs and which has so far largely avoided similar pressures and proven quite profitable if you invested in the right platforms such as monoclonal antibodies and recombinant proteins, appears to be one of the last options left for Big Pharma to survive. As the likes of Merck, Pfizer, and AstraZeneca jostle to become the leading biotech company of the future, RNAi as one of the few broad technology platforms with a unique mechanism of action has to be up very high on their priority list. So how will Big Pharma get into the game?

There are the early adopters such as Merck, Novartis, and Pfizer which have been quite public about their RNAi efforts. Merck initially played the nice guy that wanted to help companies like Alnylam translate the science of RNAi into drugs. However, with the acquisition of Sirna Therapeutics and later difficulties with Alnylam, it is clear that Merck had grander ambitions than just being a humble licensee. Pfizer on the other hand has been trying this and that as if they first wanted to confirm the clinical viability of RNAi and then make their move. Eventually, unless of course RNAi fails (which I tend not to believe), they will all have to, because even though you are now allowed to use patented technologies with the intent of developing commercial drugs, the moment you hit the market, you have to pay in one form or another, and it is common practice that the earlier you license the less it will cost you.

As I’ve been trying (in vain) to find out which Prior Art was cited in the EPO decision as a reason to restrict the scope of Kreutzer-Limmer to 15-21 base-pair double-strand RNA in 2006 (if somebody can help me here, please contact me), I have come across a webpage on the EPO site where some of the opposition history of K-L is documented. I found it quite interesting that initially, the opposition included the likes of ISIS Pharmaceuticals, now Alnylam’s modification partner for RNAi Therapeutics, and Novartis, the second Big Pharma after Merck to take a broad license from Alnylam. Both of them dropped their opposition and instead joined Alnylam. On the other side there are the likes of Sanofi-Aventis, AstraZeneca, and Atugen (now Silence Therapeutics), and we know that AstraZeneca eventually took a license from Silence, probably the cheaper option.

It therefore appears that in the not-so-distant future we will see Big Pharma split into two camps- those with Alnylam, and those against Alnylam. The rationale for the latter either being the belief that they can find a way around Alnylam’s IP estate, or at least avoid some of the royalties by trying blunt-end dsRNA of longer than 21 base-pairs should K-L’s scope not stand. Of course, the higher the going rate for the license fees, the more the temptation to go that route, and maybe Alnylam bravely does not even mind it that way too much, since a sense of exclusivity probably makes the terms of the licenses more attractive for them. Nevertheless, for somebody with the balance sheet of many in Big Pharma, this would not only appear to be scientifically quite risky, but also penny-wise and pound-foolish. As the WSJ documented so well, the times have probably come to realize that a lot of the innovation has happened outside their research labs and no matter the correlation between wallet size and ego, being humble at the right time may help you survive the next 10 years. The same EPO website also says that Janssen Pharmaceutica, a subsidiary of Johnson and Johnson, has dropped their opposition- what do you conclude?

1 comment:

construer said...

As a 'lay' Alnylam shareholder I welcome your informed analysis of the big pharma scenario. I believe, as you do it seems, that the platform provided by growing understanding of protein synthesis in biology offers a launching pad, 'the best way to go', for big Pharma. Alnylam, with its comprehensive IP portfolio, is the gatekeeper. I try to keep abreast of developments in the technology and the impact this is having on the sector. I find your analysis reassuring for balanced informed comment is hard to find.

My interest is not purely commercial. Clearly (altruistic hat on now) the development of a range of products able to 'switch off' the process of synthesis of harmful protein outcomes would be a very good thing to do.

I am particularly interested in approaches to cancer therapy. Currently I am aware, as an investor, of three entry points to the process out of which cancerous tissue emerges[DNA (the gene) transcripted into specific corresponding RNA, translated into specific protein]. Three entry points, three approaches; GeneIce (Cronos Therapeutics, Valirx) interacts at the DNA level, RNAi (Alnylam) at the RNA level and small molecule jasmonates (Sepal Pharma) at the protein level.

Each offers a platform for new drug development. From a medical point of view the three approaches are rather 'similar' because their action is specific and targets only cancer cells while having no activity on normal cells (i.e. no or fewer adverse effects). From a commercial point of view the market addressed could be the same because the three approaches could be used in a wide range of cancers (although GeneIce is only currently targeting the Bcl2 gene).

What can be inferred about the future development of the big Pharma marketplace if several viable platforms similar to those above were to become available for new drug development (i.e. presumably outside the domain of current Alnylam IP suite)? And what can you say about the future medical and commercial prospects of the GeneIce and jasmonate approaches?

By Dirk Haussecker. All rights reserved.

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