Xconomy has a look inside the Merck-Sirna acquisition, an interview with Merck's head of that area. As you'd guess, he emphasizes that one of the biggest challenges in the field is delivery, and he makes the pitch that this is how Merck is going to make this work out:
What you often read about, but many people don’t understand, is how hard it is to make a drug. Our approach to RNA Therapeutics is made with a recognition of the full package it takes to launch a successful commercial product. . .That’s versus another strategy you see from smaller companies, which is to get an interesting experimental result, and publicly disclose it in an attempt to increase the value of your investment or a VC’s investment, without a real [awareness] of what it will take to make a therapeutic eight years later. . .
We immediately, after the acquisition, invested not just heavily in the RNA piece that is here in San Francisco, but we built an entire delivery group in West Point, PA. The thing that continues to differentiate Merck is that we have people with decades of experience in pharma R&D, drug safety, metabolism, pharmacokinetics. . .
Outside of RNA as a therapy in itself, he also talks about Merck's use of the technology to better understand its small-molecule targets. It's not something that you'll ever see press releases about, but trustworthy data of that sort is very useful and important. As the Xconomy interviewer notes, Wall Street values this sort of thing as basically zero (partly because you can't see the results of it for quite a while, if they're ever made public at all), but the value inside the company can be significant.
Of course, there can be things that happen inside drug companies that significantly destroy value, too, and it's not like the stock market can see (or understand) many of those, either, but that's a topic for another post entirely. . .and on a not perhaps unrelated note, one part of the interview above seems to suggest that "POS" is an internal Merck acronym for. . .wait for it. . ."probability of success". I, uh, kid you not.
1. Sili on January 29, 2010 12:16 PM writes...
I think we're seeing a significant part of the explanation for the industry's troubles.
It's like the inflammable/flammable misunderstandings, innit.
Permalink to Comment2. rogi on January 29, 2010 3:45 PM writes...
Uh.... Look at what Merck did with Rosetta... Steve Friend, though a little rough around the edges, saw how a billion dollar aquisition was pittered away because there was no credible business model, let alone followthrough. Sad.
Permalink to Comment3. CMCguy on January 29, 2010 4:29 PM writes...
I think the majority of effort between Drug Discovery and Clinical can provide significant value if done well or conversely impede significantly if done poorly. This zone includes functions like process chem/engineering, analytical development/QC, formulations, API/FDP manufacture, supply chain Logistics, QA, Reg and scads of additional support may occur (IP, legal, marketing) during this stage of a project. Although admittedly hard to place a "Wall Street value" on such that skill and knowledge set used to be the actual strength and backbone of Big Pharma but at many places has already been ratcheted down with total reliance on outsourcing therefore no longer have that core expertise to run the projects they get from internal or in-licensed molecules.
Permalink to Comment4. Anonymous on January 29, 2010 6:49 PM writes...
"The thing that continues to differentiate Merck is that we have people with decades of experience in pharma R&D, drug safety, metabolism, pharmacokinetics."
Rumor I heard was they got rid of a lot of those people with lots of experience before aquiring, oh sorry, being aquired by Schering.
IMO, nothing distinguishes Merck from any other big pharma at this juncture. And I would not have said that 5-10 years ago.
Permalink to Comment5. Pharma Conduct Guy on January 30, 2010 8:51 PM writes...
Having managed an RNAi group myself for a big pharma and looking in from the outside, I believe that Merck is light years ahead of all the other big pharma with respect to RNAi. Whether or not it will ever deliver remains to be seen.
My personal opinion is that RNAi will probably never be useful as a drug therapy, but it can be useful for untangling the genetic basis of a disease once you have a working hypothesis.
Permalink to Comment6. Jonadab the Unsightly One on February 1, 2010 7:20 AM writes...
Any bets on how often the phrase "Big POS" gets used in relation to whatever business-method strategy management is pushing at any given moment? Yeah, boss, that means it has a big probability of success. Yep. That's why I was telling Johnson here what a big POS it is. We're all really excited about the future of the company now.
Permalink to Comment