Tuesday, September 10, 2013

BiogenIdec Obtains Exclusive Rights to Most Attractive Application of ISIS Technology

It is official.  With BiogenIdec obtaining 6 years of exclusive rights to ISIS’ antisense technology (ASO) for the evaluation of potential drug targets in the CNS and the treatment of neurological disease with ASOs, ISIS has essentially given up on the homerun potential that single-stranded antisense technology could have had in this therapeutic area.  Instead, the company continues to cap its upside and distract its attention by partnering with multiple companies in various disease areas.  What is more, in the one area where it likes to retain most ownership, targeting genes expressed in the liver for cardiovascular disease, it is likely to be eclipsed by best-in-class solutions from RNAi Therapeutics.


Deal Recognizes Unparalleled Druggability of Oligonucleotide Therapeutics

Neurological disease is arguably the most attractive application of antisense technology because of the surprisingly deep tissue penetration of the CNS following local delivery and the multitude of severe diseases of very high unmet medical need such as SMA, Huntingon’s, myotonic dystrophy and ALS.  These diseases are often genetically well-defined and thus ideal targets for the entire repertoire of antisense functionalities (gene knockdown in- and outside of the nucleus, boosting and redirecting gene expression through splice modulation).  Indeed, the fact that BiogenIdec commits so much attention to Antisense Therapeutics speaks volumes to the great competitive advantage of Oligonucleotide Therapeutics: the vastly superior drug target space versus small molecules and monoclonal antibodies, including the ability to go after the root cause of diseases.

Compared to RNAi Therapeutics, I view the deep tissue penetration following local administration of phosphorothioate-based oligos as the key competitive advantage.  This is especially the case when the target cells have a broad distribution in the CNS.  For more localized target areas, virally delivered DNA-directed RNAi Therapeutics should be competitive.

  
Flawed Business Model Based On Old Times

If you follow biotechnology, you will know that keeping commercialization rights to successful drugs rather than wholesale partnering and collecting royalties here and there is the ultimate path to shareholder value creation.

ISIS’ aversion to commercializing drugs itself can be traced back to the experience of its CEO, Dr. Stan Crooke, at Big Pharma GSK.  In his mind, it is the commercialization focus and large sales forces of Big Pharma that have been killing innovation and is wasting capital. 

The flaw in this reasoning is that times have changed and the specialty/orphan drug business model, the sweet spot of Oligonucleotide Therapeutics at that, has become a huge success in the industry.  Witness the likes of Aegerion and Alexion, but also Alnylam where retaining essentially the full rights to the TTR amyloidosis franchise alone is valued by the market at close to the entire market cap of ISIS with its dozens of clinical programs.  Accordingly, the ISIS TTR program that has been licensed to GSK is an also-ran in the valuations of ISIS Pharmaceuticals.

Apparently realizing the problems with this business model, the company has been making contortions trying to accommodate what must be hefty investor criticism with business development gimmicks such as ‘preferred partnerships’ and keeping drugs longer before licensing.  The BiogenIdec relationship obviously violates the latter principle.


With most other companies, I would not be as harsh when it comes to a $100M plus X biodollars deal. But for a $3.5B market cap company and the reasons stated above, it is difficult to find even a financial rationale for capping the value in the most attractive disease area for its technology.

3 comments:

Anonymous said...

DNA directed RNAi looking more interesting for ALS with each study.

http://www.nationwidechildrens.org/news-room-articles/therapy-slows-onset-and-progression-of-lou-gehrigs-disease-study-finds?contentid=120090

Anonymous said...

Dirk, any comments/thoughts on OGXI? Thanks in advance.

otr214425 said...

otr214425
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By Dirk Haussecker. All rights reserved.

Disclaimer: This blog is not intended for distribution to or use by any person or entity who is a citizen or resident of, or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject the author or any of his collaborators and contributors to any registration or licensing requirement within such jurisdiction. This blog expresses only my opinions, they may be flawed and are for entertainment purposes only. Opinions expressed are a direct result of information which may or may not be accurate, and I do not assume any responsibility for material errors or to provide updates should circumstances change. Opinions expressed in this blog may have been disseminated before to others. This blog should not be taken as investment, legal or tax advice. The investments referred to herein may not be suitable for you. Investments particularly in the field of RNAi Therapeutics and biotechnology carry a high risk of total loss. You, the reader must make your own investment decisions in consultation with your professional advisors in light of your specific circumstances. I reserve the right to buy, sell, or short any security including those that may or may not be discussed on my blog.