Friday, February 4, 2011

Big Pharma and RNAi Therapeutics: In-house Platform Development is ‘Out’, External Product-specific Deals are ‘In’

As if to add insult to injury, a few month after Roche exiting RNAi Therapeutics, plans emerged that Pfizer is about to shut down internal oligonucleotide therapeutics development efforts. This is depressing news for sure to me, and I would assume the wider RNAi Therapeutics community. But then again maybe not that surprising, and it would shock me no more to see Last-Man-Standing Merck shut down as well if the Tuschl trial goes against them.

Just as Big Pharma jumped onto the RNAi Therapeutics bandwagon 3-5 years ago, seemingly believing that all you need to do is to inject an siRNA into the blood and all those multi-billion dollar patent expiration woes will go away, the Big Pharma herd is now running for the exits. If you study this quarter’s financial results by Pfizer and Merck, you’ll know that there is little or no room for developing a new technology platform. Rather, it is about rescuing the top-line through Mega-Mergers with the few stilll growing large pharmaceutical companies, phase III, launch, and emerging markets, and managing the bottom-line by cutting in-house R&D. We’ve all heard it, again and again.

In essence, it is an acknowledgment that Big Pharma has failed as an innovation engine and R&D is no more a place to hide from responsibility in Big Pharma. The industry has decided that internal efforts that just serve as evaluation units of external technologies (e.g. delivery) without spearheading cutting-edge R&D themselves are not an efficient use of capital. Instead, if a therapeutic business unit was interested in a specific RNAi Therapeutics candidate, they can deal with the external company directly without the need for an in-house middleman. In fact, Pfizer has already pursued this alternative pathway as they have partnered the ddRNAi program for HCV with Tacere and a synthetic siRNA candidate from Quark for wet AMD. In both cases, there seemed to have been little involvement by Pfizer’s in-house oligonucleotide therapeutics unit.

This is not a criticism of the individuals themselves that have been part of those platform development units, but more one of an organizational nature. The more I learn about Big Pharma, the more I am struck by how little co-ordination there is within these sprawling organizations. For example, a group in one part of the world may utilize RNAi for target discovery and validation, but may not be fully aware of the technologies available from units elsewhere which work on the therapeutic aspects of RNAi.

It is, however, also a criticism of the arrogance of some organizations that innovation will happen if only you throw money at it. More than $500M by Roche, more than $200M by Pfizer, and more than $1.5B by Merck, and little to show in terms of delivery progress compared to a company like Tekmira with much more limited means. What is frustrating is that often money is spent on trying to replicate what already exists, such as LNP delivery, instead of admitting that innovation can’t be manufactured and if you really want to bring it in-house, then it is by buying it where it emerges, wherever in the world.

Almost on cue, the same day that Pfizer’s plans emerged, Marina Biotech announced a product-specific development deal with Swiss drug licensing and development company Debiopharm. This deal covers a pre-clinical stage RNAi Therapeutics program for bladder cancer (via topical LNP-siRNA administration) where much of the early development work will stay with Marina, but which will all be funded by Debiopharm, with potential downstream development milestones and royalties for Marina Biotech. Given the circumstances, severe cash crunch I would think, it is a good deal for Marina given the early stage of the program (pre-clinical). And who knows, maybe some of the work by Marina Biotech and Tekmira with Pfizer will similarly result in product-specific development deals with Pfizer therapeutic area units if results obtained thus far have been promising.

The Pfizer news is definitely not good for building investor confidence in RNAi Therapeutics, but long term it may just mean that companies with already viable clinical technologies will succeed as it will allow them to efficiently churn out and monetize high-quality development candidates, somewhat akin to what Quark’s and ISIS’ business models have been until now. That’s not to say that this is ideal for RNAi therapeutic technology development, but with maybe the exception of Alnylam, most companies won’t have many other choices.

Note: I am currently planning to resume more regular blogging as clinical results come in. Only these will be able to turn around sentiment for RNAi Therapeutics in a lasting manner.

12 comments:

Anonymous said...

Welcome back... I look forward to reading your Posts.

SQuidz said...

Great to have you back Dirk!
As Big Pharma pulls back in a Big way from RNAi, the risk rises... but so does the opportunity.

Anonymous said...

SOO frustrating how little attention Big Pharma puts into basic science, and interest driven research! It's precisely because of interest driven basic science research that RNAi was first discovered. I think the small start ups need to stop selling out to Big Pharma - if that happened, they might start paying attention to basic science research instead of just "throwing money around" to buy out those who did the basic science research.

Anonymous said...

FYI: Pfizer pulls away from siRNas as everyone else but recently entered collaboration with Santaris Pharma on LNA antisense oligonucleotides:

http://www.fiercebiotech.com/story/pfizer-ups-ante-santaris-rna-discovery-deal-614m-pact/2011-01-04

Anonymous said...

With PFE pulling out of the RNAi space it does not bode well for the science. It is going to need financing and the VC folks are going to be loathe to play without much of an out.

I see huge consolidation and a play that will be a lot longer away that even I thought.

I liquidated all my positions on Friday but will be one of your constant readers...

FYI..I do think big pharma continues to be run by idiots and with the line-up of drugs coming into generics, there will be massive consoidation there also.

RNAi believer said...

Dear Dirk , looked at the Roche memorandum on their RNAi program and was shocked at how little they achieved and what illogical targets they have focussed on. The success of RNAi in research will follow to the clinic . Worried however by the decline in Tekmira and Alnylam, does Tekmira have funding problems?

Anonymous said...

Yo Dirk Velkom bak. "Pfizer has already pursued this alternative pathway as they have partnered the ddRNAi program for HCV with Tacere". Recent development has it that Tacere has reacuired the rights for asia from oncoly.Will Pfizer also pull out of the development partnership, since they are pulling back on rnai.

Anonymous said...

Pfizer has stated they will continue with the Hep C program with Tacere and are planning to start human trials later this year , Oncolys has funding issues hence its sale of Asian rights.

Dirk Haussecker said...

Thanks very much for all the comments. They are what motivates me to resume the blog as clinical results come in over the next couple of months.

I very much subscribe to the opinion of the 2nd comment, namely 'As Big Pharma pulls back in a Big way from RNAi, the risk rises... but so does the opportunity.' Big Pharma pulling away from internal (and I stress 'internal') RNAi platform development means that once RNAi shows success in the clinic, something that can happen relatively soon (TTR, VSP, even RSV01 could be in for a pleasant surprise), then the pricing power will have returned to the (surviving) pure-play companies. For the more immediate future, the absence of internal platform efforts only increases the likelihood of product-specific deals driven by the interests of the various therapeutic focus groups in Big Pharma and, increasingly, not-so-Big-Pharma, too.

Anonymous said...

Yes, please continue your blog I am so glad you have started it up again; I look forward to progress on otherwise untreatable conditions such as Huntingdon's.

pradeepkumar pi said...

Hi Dirk, check this out

http://www.lab-times.org/labtimes/issues/lt2011/lt01/lt_2011_01_42_43.pdf

John Dudley said...

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