Thursday, January 28, 2010

Sirna Therapeutics (Merck) in Damage Control Mode

Whenever a Big Pharma talks about RNAi Therapeutics, the investor world listens. Sometimes, however, it is important to put such comments into context, especially now that Merck may very well see its $1.1B investment, essentially into Sirna Therapeutics’ supposedly fundamental Tuschl I patents, evaporate. The $45M+$12M it had to pay in a settlement with Protiva (now Tekmira) for allegedly misappropriating SNALP-related trade secrets would almost seem to pale by comparison. So here a few annotations to an interview that Merck strategically put out recently in the Xconomy and that has raised some eye-brows in the field by providing some rare insights into their hitherto largely top-secret RNAi Therapeutics operations and by revealing some unorthodox drug development philosophies.

“Somewhere around the middle of 2006, we realized that Alnylam did a big deal with Roche, and we realized the area was heating up. We needed to do more than a collaboration per se. It ultimately led to the decision to acquire Sirna Therapeutics, which closed at the end of 2006.”

Merck clearly bought Sirna Therapeutics largely for what Sirna’s management told them to be gate-keeping IP: Tuschl I. This is also illustrated by the fascinating revelation by Dr. Alan Sachs, responsible for RNA Therapeutics at Merck and watched over by a Merck spokesperson during his interview, about Merck’s rush to buy Sirna Therapeutics in 2006. According to the interview, Merck seemed to have heard somehow through the grapevine in 2006 already that a large Roche-Alnylam deal was in the works. Fearful of being shut out from the fundamental RNAi Therapeutics IP, it scrambled to secure freedom-to-operate by purchasing Sirna Therapeutics which had always touted Tuschl I to cover human therapeutics. What follows is history...Merck buys Sirna, the Alnylam-Roche is announced the next summer, and what had to happen happened: Alnylam terminates their collaboration with Merck as it simply became untenable to have a relationship based on the very IP Merck was ardently fighting.Unfortunately for Merck, around the same time Tuschl I started to encounter serious problems in both Europe and the US (see Tuschl Tussle blog).

In this context it is easy to see why Merck is now emphasizing the value of RNAi as a target validation tool instead of a direct therapeutic, and justifies the $1.15B price-tag for Sirna Therapeutics on that basis. While I agree that RNAi should already have a beneficial financial impact throughout the drug development industry by reducing the target risk for other classes of therapeutics, what those responsible for the Sirna purchase should know best, but probably would not want to tell their superiors or shareholders, is that you do not have to pay $1.15B upfront to use RNAi for such purposes. For example, BMS and J&J have been getting the same benefit by working with Tekmira for a fraction of that cost.

And then, yes, we almost forgot that delivery was a challenge. However, taking a step back I find it remarkable that the systemic delivery of siRNAs has progressed from just about being able to knock down genes in mice, to the well established ability to knock down genes in primates and with first evidence for efficacy having been observed in humans. Not insignificant scientific progress for a period of 4 years, and maybe for fairness sake something that Dr. Alan Sachs ought to have mentioned. On the other hand, saying that others have achieved much more with much less does not reflect very well on yourself or organization. And while lipid-based delivery may be the only delivery technology that is ripe for the clinic at this moment, let's not forget that even a single such technology can unlock tremendous value by immediately being applicable to a whole range of diseases.

"AS: It’s a combination of the competition, and from our seat, a misunderstanding of the intent of the collaboration. That is, the field is so ready to put money in, we don’t want a Merck collaboration to be read as a sign of approval...”

To underscore his ‘concern’ that others should not make the mistake of overpaying for delivery technology, Dr. Sachs characterizes most of what is being presented to Merck essentially as worthless, theoretical back-of-the-envelope stuff. I would not want to argue with him that this was not true to some extent, using such deer in the headlights that inevitably will crop up in hot areas such as RNAi Therapeutics as an argument for demanding lower prices for anything delivery does not do justice to the real gems that are out there. And honestly, who really believes Merck to be sincerely concerned about the fiscal responsibility of competitor companies? Thanks for the well-meaning advice.

And to those 1% of clueless small biotech companies that, against all odds, have been found worthy of Merck’s further attention: Don’t get too excited about it. Now, you will have to work with them long enough until they have had enough time to familiarize themselves with your technology to then be able to terminate the relationship. No wonder that a company like Roche has become a much more desirable and, importantly, also a significantly more successful partner when it comes to sourcing RNAi delivery.

"[Unlike] companies developing [RNA-based] ApoB or PCSK9 therapies, for familial hypercholesterolemics, we’d stop our studies at Phase I to show that LDL is lowered or HDL is raised and follow with a small molecule."

Unsurprisingly, Alnylam and Tekmira got special treatment. Only biotech companies, all of which by the way are destined to fail anyway since they can’t afford the 30-year timelines that it takes a Merck to bring innovation to patients, would go into the clinic with intravenous formulations aimed at lowering LDL-cholesterol in desperately underserved hypercholesterolemic patients. I mean, huh, where is the consumer convenience in that?Instead, what you should follow is Merck’s model that, if I interpret him correctly, aims at selling life-style pills to millions of people, including those that won’t benefit from it. So as long as it is convenient and we are able to show in a 20,000 patient trial some minimal, though statistically significant benefit, that's how we plan to contribute to healthcare.

"AS: There are three main areas of delivery. First are lipid-based delivery systems. At the time of our acquisition of Sirna, they had successfully shown lipid-based delivery to the liver. Initially, it was through a collaboration with what is now called [Vancouver, BC-based] Tekmira. That was really the leading standard for the area. Several [applications to begin clinical trials] have been filed with the FDA. We spent a lot of internal research money and time on novel lipids. The liability of that platform is absolutely its safety. As you know from writing about the area, the biodistribution of lipid is focused toward the liver. Which has some indications that are useful for IV therapy, but it’s restrictive with respect to cancers and diseases of other organs."

While Merck seems to respect Alnylam to some degree, for the simple reason that only entities with money deserve respect, little Tekmira must feel quite flattered that it inflated itself large enough to be mentioned a second time. According to Dr. Alan Sachs, SNALP delivery is simply toxic and hopeless. Well at least as a therapeutic, maybe not for 'biomarker-driven' studies. If he had read the scientific literature since 2006, the time Merck lost access to the cutting-edge of liposomal delivery, then maybe Tekmira has learned a thing or two about SNALP technology since. Maybe Dr. Sachs ought to state the real reason why Sirna/Merck has soured on liposomal delivery, at least in public: In 2006, Sirna Therapeutics settled with Protiva on allegations of having misappropriated trade secrets during their collaboration which cost Merck $45M upfront, and $12M in contingent payments [note: to be clear here, the events leading up to this settlement occurred before Merck acquired Sirna].

Surprisingly, and coming as a potential bombshell, the premature nature of even the leading systemic RNAi delivery technology has apparently not stopped Merck from using RNAi Therapeutics in Man and out of the public’s eye:

“Do you have a lead drug candidate that’s been identified and ready for the clinic, or anything demonstrating safety and efficacy in the clinic?

AS: Again, our Phase Ib, IIa clinical trials [of RNAi molecules] biomarker driven studies are for target validation and de-risking. We wouldn’t disclose those, because those are targets that are quickly followed by a small-molecule or biologic. Because the indication might not be consistent with an RNAi therapeutic delivered through intravenous means. No diabetic in the general population, if you’re a Type 2 diabetic on [multiple oral drugs], then IV therapy isn’t going to work.”

This also reminds me of some cryptic comments in another interview given almost 2 years ago by a Merck business development person, who has left the company since, to an Indian newspaper:

“On the research front, the company is working towards providing personalized medicine. It has screened over six lakh RNAi, out of which two to three are in clinical trials and 10-20 are candidates for in pre-clinical trials.”

Given that Merck had used SNALP delivery in the past and SNALP has clearly been Merck’s leading systemic RNAi delivery technology, and with the reference to IV administration and metabolic disease, former Protiva shareholders may want to take particular note here. This is because the $12M in contingent payments from the settlement are payable to former Protiva shareholders upon the filing of a SNALP-related IND ($6M) and the dosing of the first patient in such a phase II trial (another $6M). It is quite curious then that Merck would characterize these studies as ‘biomarker-driven’ and to state that they had no intention of ever further developing these ‘drug candidates’.

So when in the next months Merck will be asked by their shareholders whether it bothers them to have forked over $1.1B for what now more and more appears to be worthless Tuschl I IP, and may not even have been rightfully assigned access to it in the first place, the attempt at damage control might go like this: ‘Oh Tuschl I…? We almost forgot about that. And no, we don’t believe that our position has changed significantly since the Max Planck-Whitehead trial because a patent with an 2020 expiration date is of no therapeutic relevance anyway. And if RNAi Therapeutics will ever make it to market, our significant investments will ensure that Merck will be there leading the pack, but we won’t tell you why nor show you (or audiences at scientific conferences for that matter) any data to back it up. Just trust our track record of cunningly making just the right strategic decisions when it comes to RNAi Therapeutics’.

4 comments:

John said...

Here’s the latest. On the 25th of January, Max Planck filed an amended Complaint. That may mean the parties will need more time to do discovery. The Judge set a hearing for 8 Feb to determine the new scheduling of matters in the case. At this point, I’d be surprised if this went to trial on Feb 22nd. Best to check on the 9th of Feb to see what happened.

"FIRST AMENDED COMPLAINT against Board of Trustees of the University of Massachusetts, Whitehead Institute for Biomedical Research, Massachusetts Institute of Technology, filed by Max-Plank-Gesellschaft Zur Forderung Der Wissenschaften E.V., Max-Planck-Innovation GmbH, Alnylam Pharmaceuticals, Inc. (Attachments: # 1 Part 2)(Patch, Christine) (Entered: 01/27/2010)"

John said...
This comment has been removed by a blog administrator.
Dirk Haussecker said...

John-
Thanks for the info. They are much appreciated. I deleted your last comment to protect your inbox from spam.

Generally, people can get in touch with me directly by emailing me at myfirstname.mylastname@gmail.com

G said...

Excellent article Dirk - importantly, excellent objective views of the sort that one doesnt normally get to read.

It is amusing to read the Merck guy's bizarre and rather sour comments. He describes the work with Allergan as a success, but clearly forgets to mention the Phase II failure, Sirna-027.

'Merck is now emphasizing the value of RNAi as a target validation tool'
Comedy!

It would seem that Merck is trying to deflect the oft asked question of 'what have they done since acquiring Sirna?'.
The real answer would of course be that they rushed into buying Sirna in case they got locked out of a groundbreaking technology.

By Dirk Haussecker. All rights reserved.

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