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.
