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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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In the Pipeline

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May 28, 2008

Awash in Yen

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Posted by Derek

So Takeda has opened up its roomy wallet once again, and signed on with Alnylam for a nonexclusive partnership in oncology and metabolics. The InVivoBlog has all the details, but the main point is that Takeda had to put $100 million down at the beginning, with all the milestones, options, and extras coming after that. And Alnylam’s CEO seems to be saying that he’s not going to bother with any offers down in the mere double-digit millions, so don’t waste the man’s time. Roche didn’t – they signed a non-exclusive deal of their own with the company last year.

There are several interesting things about this. One is that Takeda is really in a deal-making mode, apparently, which (historically) has been unusual for a Japanese company. But no Japanese drug company has ever quite been in the position that they find themselves in – a big international player with patent expirations coming – so I guess we should expect something new. More remarkable, though, is the nonexclusive nature of all these deals that Alnylam is making. Other things being equal, of course, larger drug companies much prefer exclusive deals, or a complete buyout. That's what Merck did with Sirna in this same area, in what was no cheap deal, and one that led to Alnylam terminating their own Merck agreement. In this case, though, the amount of money for such terms has apparently been too much for anyone to handle, or Alnylam has perhaps just refused to go exclusive. It’s worth thinking about the position they feel they must be in, to make that stick.

The last time I can remember a situation like this was when the genomics frenzy was on. And I think the RNAi business is turning into something very similar, for very similar reasons: fear and greed, the two flywheels of the financial world. We'll take the greed as stipulated, since the whole purpose of modern capitalism is to harness its mighty and potentially destructive force. But the fear, in both cases, was the very real fear of being left behind when a rare landscape-altering technology is potentially coming on. If there really had been dozens of good ready-for-prime-time targets lurking out there in the genomic data, well, the companies that sewed them up would do very well, and the ones that didn’t would eat dirt. So better to spend the money, right? And so it is with RNA interference: if it really does work therapeutically, there are going to be a lot of previously-undruggable targets within reach, as well as a lot of new shots at the ones we already know. So. . .better to spend the money again?

I suppose there’s no way around it, even though I’m not convinced that RNAi is going to deliver any time soon (or at all?) After all, its difficulties seem (to me) very much like those of antisense DNA, subject of yet another train’s-leaving-the-station investing frenzy in the late 1980s and early 1990s. For one thing, delivering these oligonucleotides in a living human is definitely nontrivial, to use a word that scientists and engineers use to mean anything from “pretty damn hard” to “impossible at the present level of human civilization”. I don’t think that RNA therapy is in the second category, but I do think that it’s in the first category good and hard.

And there’s the whole question of off-target effects, which I’ve spoken about here before. These may not be show-stoppers, true, but the problem is that we don’t know if they are or not. At the very least, it’s a complicating factor, and a big one – and the fact that it’s out there makes you wonder what other interesting complications are yet to be discovered as we go into humans.

So no, RNAi is not going to remake the landscape later this year or anything. It’s going to be a long business, with (I feel sure of it) plenty of expensive head-slapping and hand-wringing along the way. But all that said, can a company like Takeda (or Roche, or Merck, or. . .) afford to ignore it? After all, by the time the kinks are worked out of the technology, it’s presumably going to be too late to buy into it. (Or if you can, it’s going to make the 2008 prices look like the discount rack). Perhaps it’s better to just decide that that’s what the money’s for, to buy into things that could pay off big, with the realization that most of those purchases are going to look idiotic in ten years. . .

Comments (8) + TrackBacks (0) | Category: Business and Markets | Drug Industry History


COMMENTS

1. Petros on May 28, 2008 7:56 AM writes...

Derek

I'm sure you are right that siRNA will be along haul, just look at antisense and the limited progress.

Takeda's strategy is logical and one in which they, of all the Japanese companies, are best pleced to pursue. But whenever I look at Japanese company pipelines they always look poor in comparison to Western ompnaies of similar sizes. I can never quite figure out why

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2. DRG on May 28, 2008 9:44 AM writes...

As a grad student in the hardcore synthetic field, I don't know much about this RNAi stuff. Have you posted on it before, Derek? If not, anywhere I can learn more? Thanks.

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3. Chulo on May 28, 2008 9:59 AM writes...

I'm up to my neck in RNA silencing. You can begin at wikipedia, DRG... http://en.wikipedia.org/wiki/RNA_interference.

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4. HelicalZz on May 28, 2008 10:21 AM writes...

RNAi is a great technology - no question about it. But whether it becomes an effective therapeutic category remains to be seen, and there is an whole lot lined up against it. These are big bets based on some very real promise, but I'm still not inclined to put any of my money behind it.

Zz

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5. milkshake on May 28, 2008 5:41 PM writes...

God have mercy on the process group scaling up the RNAi candidate when there is one...

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6. MTK on May 29, 2008 7:48 AM writes...

Besides the technology, one shouldn't forget that the weakness of the dollar makes acquisition/investment by foreign companies very attractive right now. Takeda, in this instance, paid nearly 20% less than it would have a year ago simply due to exchange rates. So if your an European or Asian company with some cash on hand and a perceived need, the US is a great place to look for deals.

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7. Kay on May 29, 2008 8:20 AM writes...

Derek, you've got to look at this from the management perspective: we have all these chemists, we spend all this money, we give them every productivity tool they ask for (e.g., unlimited machine time for rule of 5 filtering, rotatable bond counting, any other miracle tool that comes along), and we get virtually nothing marketable out of the back end. External speculation looks the same as internal speculation.

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8. phlogiston on May 29, 2008 5:55 PM writes...

milkshake

RNAi is being done at process scale fairly easily. The bigger worry is making commercial scale. Hopefully the demand will drive capacity from outside vendors.

I think in the short term RNAi will have a much bigger impact on med chem for target validation.

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