Monday, May 10, 2010

Drug Development Upside Down: Tekmira Getting Paid as BMS Supports Pre-clinical Development

This morning, Tekmira Pharmaceuticals announced a quite unusual type of drug development deal with Bristol-Myers Squibb (BMS). In this expansion of their existing relationship, BMS will have continued access to Tekmira’s industry-leading RNAi delivery technology, SNALP, for target validation. What makes this such an unusual deal, however, is the fact that BMS will share the resulting data with Tekmira which then can turn around and use it to develop its own proprietary RNAi Therapeutics, and on top of that getting paid for it…!

Over the years, the relationship between Tekmira and BMS has taken on a more and more therapeutically flavored character. The partnership initially started out as a type of services relationship whereby Tekmira, then as Protiva, monetized on their liposomal siRNA delivery technology by helping BMS validate drug targets. However, another not insignificant benefit to Tekmira already then was that such services work was highly synergistic with their focus on drug development because such work allowed it to further develop its expertise in SNALP delivery at the partner's expense.

The stickiness of the alliance alone can be considered as evidence that BMS must have been quite pleased with Tekmira's technology. The relationship was first expanded in 2008 to develop SNALP delivery for tissues outside the liver. The following year, BMS then exercised their option to extend the collaboration for another year. This to me was the first indication that BMS might even be interested in RNAi Therapeutics as a drug modality itself and consider SNALP as a promising means to facilitate it. Why otherwise would BMS help develop the basic capabilities of a delivery technology instead of just waiting until Tekmira or any other company could offer a technology ready for such target validation?

On the surface, today’s news could be overlooked as simply extending an already existing relationship in which Tekmira keeps helping BMS validate drug targets. What is very new, however, is that Tekmira can now use gene target-specific data generated during this collaboration, including those by BMS (!), for developing their own RNAi Therapeutics. I have certainly noticed that Tekmira has become a bit cautious about which targets to exercise their 7 picks under Alnylam IP for. For small biotechs that depend on Big Pharma collaborations to fund late-stage trials, the danger of picking a target not desired by Big Pharma is very real. One of the general advantages that Big Pharma has over many of the smaller biotech companies, including Tekmira, is that they can afford to invest in technologies that allows them to pick better targets. This deal thus provides Tekmira with access to the target picking capabilities of a Big Pharma.

One thing that I am curious about is how the deal negotiations evolved. One way to interpret the deal is that BMS is still primarily concerned about target validation and if Tekmira wanted to compete with BMS on some of the targets, so be it...although at the not so inconsiderable expense of instantly granting Tekmira a significant development lead (no need to go through the lengthy small molecule lead discovery and optimization process) and the loss of exclusive target IP. On the other hand, it is possible that BMS approached Tekmira because it was primarily interested in developing RNAi Therapeutics themselves with Tekmira replying ‘yes, but only after you let us pick the best targets as we could use your target picking expertise but also wouldn’t want to help other companies in competing with us for targets that they validate with our own technology.’ Whether this was the case or not, one should not underestimate Tekmira’s ability to say ‘no’ if a technology license would invite too much competition (btw, this is the reason why I would not expect a simple Novartis-Tekmira licensing deal, because Novartis sits higher than Tekmira on the target picking pecking order).

In summary, I believe that this strategic deal was done by a company focused on building a biotech company that can stand on its own feet, giving away almost nothing in return for enhancing their ability to develop their own therapeutics pipeline...and also adding some cash to its coffers, always welcome these days. Having said that, Tekmira’s 7 other SNALP technologies licensees and others in Big Pharma still on the sidelines will have to realize that the longer they wait, the higher the price. To paraphrase the CEO of GSK, quality in small biotech still has its price, despite the economic turmoil.

[Disclosure: DH owns shares in Tekmira Pharmaceuticals]

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By Dirk Haussecker. All rights reserved.

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