2010

Breakthroughs of the Year

As it does every year, Science published its “Breakthrough of the Year” for 2010 in the 17 December issue of the journal.

For its “Breakthrough of the Year”, Science chose a non-life science innovation, the first quantum machine. Interestingly, the same issue of Science included a Perspective on biophysicist Britton Chance, who died last November at the age of 97. Among his many accomplishments, Dr. Chance discovered that biological electron transfer operates via quantum tunneling, a mechanism central to photosynthesis, respiration, and many oxidoreductase enzymes. Mitochondria, chloroplasts, and oxidoreductase enzymes thus constitute biological quantum machines of a sort.

Interestingly, Dr. Chance continued to work on metabolism all of his long working life, including in the era of molecular biology when interest in that field waned. By doing so, he made many important contributions, including the mechanism for the generation of the reactive oxygen species (ROS) superoxide and peroxide during normal mitochondrial respiration, and the  use of near-infrared (NIR) light for noninvasive diagnostics.

Although Science chose a non-life science advancement as its “Breakthrough of the Year”, the journal’s runners-up for “Breakthrough of the Year” were replete with life science items. The first runner-up was the synthetic Mycoplasma mycoides genome constructed by the J. Craig Venter Institute, which they used to create “the first synthetic cell”. As we discussed in a series of two articles on this blog (see here and here) although the creation of the synthetic genome and the “synthetic cell” represented a technical tour de force, it did not represent a true breakthrough. Many leading scientists, including leaders in the field of synthetic biology, agreed with us. However, at least several bioethicists and philosophers hailed this work as a milestone, calling it “the end of vitalism”. (As we noted in another blog post, however, not all bioethicists agree.)

Moreover, policy-makers were sufficiently alarmed by the “synthetic cell” that (as noted in the Science “Breakthrough of the Year” runners-up article) the Presidential Commission for the Study of Bioethical Issues held hearings on policy implications of this research. Nevertheless, the report of this commission (issued in December 2010) concluded that the Venter research “does not amount to creating life as either a scientific or a moral matter” and that synthetic biology remains “in the early stages,” with any dangers well into the future. The commission recommended continuing White House oversight, but a relatively mild set of regulatory measures.

As we said in our second article on the “synthetic cell”, we are much more impressed by the metabolic engineering studies of Jay Keasling, and by George Church’s automated method for optimizing metabolic engineering pathways, which we had discussed in an earlier blog post. The Science “Breakthrough of the Year” runners-up article mentioned Dr. Church’s automated system, among other synthetic biology advances made in 2009 and 2010.

Meanwhile, in a review of metabolic engineering published in the 3 December 2010 issue of Science, Dr. Keasling says that although minimal bacterial hosts such as Dr. Venter’s “synthetic” mycoplasma may be of scientific interest, they are not suitable to use in metabolic engineering studies whose goal is scale-up for industrial production of medicines, chemicals, or biofuels. This agrees with our statement that such applications require  “workhorse” organisms that can take the extensive genetic manipulation needed to engineer new metabolic pathways, and which are capable of scale-up.

We therefore believe that the “synthetic cell” is not the life science breakthrough of the year, despite its placement at the top of Science‘s “Breakthrough of the Year” runners-up article.

Our nominee for the life science breakthrough of the year is listed right under the “synthetic cell” in the Science “Breakthrough of the Year” runners-up article. It is the determination of the sequence of approximately two-thirds of the Neandertal genome by Svante Pääbo (Max-Planck Institute for Evolutionary Anthropology, Leipzig, Germany.) and his colleagues. This achievement is something that only a few years ago seemed completely impossible. Moreover, this work is of great cultural significance, since it indicates that Neandertals contributed some 1-4 percent of the genome sequences of non-African present-day humans. More recently, Dr. Pääbo and his colleagues followed up the Neandertal studies by using their DNA synthesis methods to identify a third species of humans, known as Denisovans. Denisovans, who were more closely related to Neandertals than to modern humans, were alive at the same time as modern humans emerged from Africa and also encountered the Neandertals. Dr. Pääbo’s new studies indicate that the Denisovans contributed some 4–6% of the genome sequences of present-day Melanesians.

Despite the importance of the Pääbo Neandertal studies, we have not blogged on this work simply because it has nothing to do with drug discovery and development. However, perhaps someday, for example, some of the products of genes that are found in present-day humans but not in Neandertals could emerge as potential drug targets. As discussed in the Science “Breakthrough of the Year” runners-up article, researchers have begun studying some of these gene products in cell culture systems.

Moreover, the types of advanced, next-generation DNA sequencing methods used by Dr. Pääbo and his colleagues are being applied to studies that are relevant to drug discovery. These include the 1000 Genomes Project, which seeks to find all single-nucleotide polymorphisms (SNPs) present in at least 1% of humans. This and other next-generation genomics projects were listed in the Science “Breakthrough of the Year” runners-up article, as the third runner-up. The 1000 Genomes Project, as well as genome-wide association studies (GWAS) that use high-throughput DNA sequencing methods, may enable researchers to identify rare mutations that are involved in complex human diseases. This might in turn lead to the discovery of novel drugs and diagnostics.

Among other life science items in the Science “Breakthrough of the Year” runners-up article was the production of knockout rats. We discussed knockout rats in an October 1, 2010 blog post.

Newsmaker of the Year

Nature also had an end-of-2010 special article, “The Newsmaker of the Year”, in its 23/30 December issue. Unfortunately, Nature chose a U.S. government official as its Newsmaker of the Year.

We would prefer that Nature stick to what it does so very well, and stay out of U.S. politics, whether in its “opinionated editorials” [sic] or elsewhere. Perhaps the low point in Nature‘s political forays was its November 2010 editorial calling for what amounts to a new version of Prohibition. This is despite the ample evidence that moderate consumption of red wine (for example) is healthy for most adults. Readers would be well advised not to believe everything they read in Nature editorials.

Our nominee for Newsmaker of the Year in the life sciences is Dr. Svante Pääbo, for the reasons we discussed earlier.

Deals of the Year

Also as an end-of-year feature, the IN VIVO blog has been running a Deal of the Year competition. The nominees are grouped in three categories: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year.

Only one of the nominees had been featured in an article on our blog: the Celgene/Agios alliance (April 23, 2010).

The IN VIVO Blog invited readers to vote on the Deal of the Year in each of the three categories, by going to their website. The voting closed at 12:00pm on 6 January 2011 (Eastern Standard Time).

The winners of the vote were:

• M&A Deal of the Year: Celgene/Abraxis (50.31% of 1,799 votes)
• Alliance Deal of the Year: Celgene/Agios (55.32% of 3,176 votes)
• Exit/Financing Deal of the Year: Ablexis (46.54% of 1,631 votes)

Congratulations to all the winners, especially Agios and Celgene, which were featured in our blog post.

Happy New Year!

This is our own version of an end-of-year special article, and will be our last blog post of 2010. Best wishes to all of you for a happy, productive, and innovative New Year in 2011.

As the producers of this blog, and as consultants to the biotechnology and pharmaceutical industry, Haberman Associates would like to hear from you. If you are in a biotech or pharmaceutical company, and would like a 15-20-minute, no-obligation telephone discussion of issues raised by this or other blog articles, or of other issues that are important to  your company, please click here. We also welcome your comments on this or any other article on this blog.

Citric acid cycle

The 3 December issue of Science featured a Special Section on metabolism, headed by an introductory article entitled “Metabolism is Not Boring”.

Way back in the 1920s through the 1950s, intermediary metabolism was a hot field of biology. This culminated in the awarding of the Nobel Prize in Physiology or Medicine in 1953 to Hans Krebs “for his discovery of the citric acid cycle” and Fritz Lipmann “for his discovery of co-enzyme A and its importance for intermediary metabolism”.

As most of you know, that same year, 1953, Watson and Crick published the structure of DNA, which won them the Nobel Prize in Physiology or Medicine in 1962. This began the great era of molecular biology. As the result of the overwhelming success of molecular biology, the study of intermediary metabolism receded into the background. Answering most questions in leading-edge biology required little or no attention to intermediary metabolism. However, as discussed in the review article by Steven L. McKnight included in the Special Section, metabolism is coming to the forefront of biomedicine again. Research problems that require both consideration of molecular biology and of metabolism now appear as interesting and important challenges.

Considerations of intermediary metabolism have always been important in the study of what are known as metabolic diseases, especially type 2 diabetes and obesity and such related conditions as dyslipidemia. However, as detailed both in the McKnight article and in an article by Arnold J. Levine and Anna M. Puzio-Kuter, the study of intermediary metabolism has now also become important in cancer, with the discovery that alterations in metabolic enzymes can result in the production of “oncometabolites” that support the growth of cancer cells.

In an article on this blog dated December 31, 2009, we discussed research in cancer metabolism that is behind the technology platform of Agios Pharmaceuticals (Cambridge, MA). In that article, we highlighted the discovery that mutations in a metabolic enzyme, cytosolic isocitrate dehydrogenase (IDH1) are a causative factor in a major subset of human brain cancers. The wild-type form of IDH1 catalyzes the NADP+-dependent oxidative decarboxylation of isocitrate to α-ketoglutarate. However, the mutant forms of IDH1 catalyzes the NADPH-dependent reduction of α-ketoglutarate to R(-)-2-hydroxyglutarate (2HG). 2HG appears to be an oncometabolite that is involved in the progression of low-grade gliomas to lethal secondary glioblastomas. Agios researchers and their academic collaborators later implicated mutations in isocitrate dehydrogenase enzymes and the production of the oncometabolite 2HG in the pathogenesis of acute myelogenous leukemia (AML).

Also discussed in our article was the Warburg effect, in which cancer cells carry out aerobic glycolysis (conversion of glucose to lactate, with the production of 2 molecules of ATP even in the presence of oxygen). In contrast, most normal mammalian cells metabolize glucose to CO2 and water via glycolysis coupled to the mitochondrial citric acid cycle, generating 36 molecules of ATP. Agios scientific founder and signal-transduction pioneer Lewis Cantley showed that there is a connection between growth factor-mediated signal transduction and aerobic glycolysis in cancer cells. In particular, Dr. Cantley and his colleagues found that pyruvate kinase M2 (PKM2) is a link between signal transduction and aerobic glycolysis. PKM2 binds to tyrosine-phosphorylated signaling proteins, which results in the diversion of glycolytic metabolites from energy production via mitochondrial oxidative phosphorylation to anabolic processes required for rapid proliferation of cancer cells.

The McKnight and Levine and Puzio-Kuter papers also discuss the Warburg effect in cancer cells, and the role of mutations in several metabolic enzymes that contribute to malignant phenotypes. The McKnight article notes that in addition to dominant mutations in isocitrate dehydrogenates, rare recessive mutations in fumarate hydratase and succinate dehydrogenase are also associated with cancer. Mutations in the genes for these enzymes, coupled with loss of the wild-type allele, result in elevated intracellular levels of fumarate and succinate, respectively. These appear to act as oncometabolites that can induce activation of the hypoxia response pathway, which triggers the induction of aerobic glycolysis (the Warburg effect) and angiogenesis.

The Levine and Puzio-Kuter paper also discusses the role of oncogenes and tumor suppressor genes and their signaling pathways in regulating metabolism and in particular in inducing the Warburg effect. For example, p53 regulation suppresses the Warburg effect and promotes mitochondrial oxidative metabolism. Thus the loss of p53 function seen in most human cancers tends to promote aerobic glycolysis. Other signaling pathways that have been implicated in cancer-associated changes in metabolism include the Akt and mTOR pathways, which are frequently altered by mutations in key genes (e.g., mutations in PTEN and amplifications of such growth factor receptors as Her2 and EGFR) in cancer.  Deregulation of these pathways activates the hypoxia response pathway, thus triggering the Warburg effect.

Levine and Puzio-Kuter suggest that research aimed at a deeper understanding of how cancer-associated signaling pathways regulate biochemical metabolic pathways and trigger the Warburg effect, and the role of the Warburg effect in the pathogenesis of cancer, may lead to novel drug discovery strategies in oncology.

The Special Section on metabolism also includes an article on autophagy, a process by which cells break down cellular components in order to eliminate damaged biomolecules and organelles or to provide substrates for metabolism in case of starvation. Although autophagy promotes the health of cells and can prevent degenerative diseases, it can also enable cancer cells to survive in nutrient poor tumors.

There is also a review by Jay Keasling on metabolic engineering to produce such substances as natural product drugs, chemicals, and biofuels. Metabolic engineering is a branch of synthetic biology that engineers metabolic pathways to produce such substances, hence the inclusion of this review in the Special Section on metabolism. We have several articles on synthetic biology on this blog, most of which focus on metabolic engineering and its role in drug manufacture and drug discovery.

All in all, the 3 December Special Section on metabolism is worth reading by basic researchers, and by drug discovery and development researchers in biotechnology and pharmaceutical companies. It may broaden your perspectives, and lead to new ideas for R&D or partnering, especially in oncology drug discovery.
___________________________________________________

As the producers of this blog, and as consultants to the biotechnology and pharmaceutical industry, Haberman Associates would like to hear from you. If you are in a biotech or pharmaceutical company, and would like a 15-20-minute, no-obligation telephone discussion of issues raised by this or other blog articles, or of other issues that are important to  your company, please click here. We also welcome your comments on this or any other article on this blog.

Source: Calvero. http://bit.ly/dGrWW3

In a one-page article entitled “Research and develop” in The Economist’s publication “The World in 2011”, GlaxoSmithKline (GSK) CEO Andrew Witty outlined the challenges facing the pharmaceutical industry today, and what to do about them.

Mr. Witty began with a familiar catalogue of challenges, including patent expiries and competition from generics, pricing pressure due to government health care policy changes, and increasing caution by regulatory agencies such as the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMEA).

At the same time as marketed drugs–especially blockbuster drugs that Big Pharmas have been depending on for much of their revenue–have been losing patent protection, the productivity of pharmaceutical R&D has been declining. Mr. Witty observes that as long as there is a gap between the number of marketed drugs that go off-patent and the number of new drugs coming out of R&D, the size of the pharmaceutical industry will continue to diminish.

This is being accomplished via mergers and acquisitions, as well as severe cuts in budgets and in workforces. These cuts have been affecting all functions of pharmaceutical companies, from R&D through manufacturing, marketing, and sales. Pharmaceutical mergers and acquisitions were much in the news in 2009, while budget cuts and layoffs have been prominently features of  pharma industry news in 2010.

Mr. Witty said that going forward it will be critical to “get R&D right”–reverse the decline in productivity, improve success rates for regulatory approval, and to launch drugs that will have major impacts in treating disease, rather than just incremental improvements.

While the numbers of approved new molecular entities (NMEs) and novel biologics–especially breakthrough drugs–that have been launched onto the market has declined, the cost of R&D has been going up. The dramatic rise in R&D spending between 2001 and 2008 or so has been mainly due to the industrialization of drug discovery–the attempt to use genomics, proteomics, combinatorial chemistry, high-throughput screening, and other technologies to create large-scale, automated platforms for discovering drugs. Some large pharmaceutical companies even established what they called “drug discovery factories” during the heyday of technology-driven drug discovery. And one prominent genomics-based biotechnology company claimed that they were “industrializing biology”.

According to Mr. Witty, shareholders no longer will support additional monies invested in R&D without commensurate increases in productivity. Based on a rational allocation of resources, R&D should instead be cut. This, in fact, is what has been happening in much of the industry.

Mr. Witty sees two solutions to this dilemma. The first is to “create an environment in the labs that reflects the fact that discovering a drug is as much an art as it is a process”, and to combine this approach with the allocation of resources “only to where the prospects for success are greatest”. This would be combined with streamlining of drug development, especially by ending the development of “drugs which do not offer the prospect of being truly distinctive” (and, presumably, drugs that are likely to fail in late-stage clinical trials) early.

The second is to implement more innovative R&D partnerships, including with small biotech firms and academia, and such Big Parma-Big Pharma collaborations as the specialized HIV company VIV Healthcare, which was created by GSK and Pfizer.

Presumably, the various precompetitive collaborations between Big Pharmas, such as Boston-based Enlight Biosciences, would also be included under the category of innovative collaborations between Big Pharmas. Enlight was founded by venture capital firm PureTech Ventures, in partnership with Merck, Pfizer, Lilly, Johnson & Johnson, Novartis, and Abbott. Enlight’s goal is to “develop breakthrough innovations that will fundamentally alter drug discovery and development”.

Our take on Andrew Witty’s article

Anyone familiar with our consulting group, Haberman Associates, our publications (going back to 1999), or this blog, is no stranger to the type of solutions set forth in Mr. Witty’s article. In particular, see our 2009 article, “Overcoming Phase II Attrition Problem”, and our blog posts of February 19, 2010 and of July 20, 2009. For a more in-depth presentation, see our 2009 book-length report Approaches to Reducing Phase II Attrition.

The basic problem with “industrialized drug discovery” is not so much that it is expensive, but that it does not work. The reason for this is that a genomics-based “numbers game” approach does not give the fundamental understanding of disease biology, and the role of a target in a disease, that is needed for effective drug discovery. This is compounded by the usual mismatch between compounds created by combinatorial chemistry (another “numbers game”) and disease-relevant targets.

One needs to instead identify those targets and drugs that have the best chance of success in the discovery phase, mainly via focusing on biology-driven drug discovery (i.e., strategies based on understanding of disease mechanisms), coupled with smart (and target-focused) chemistry, whether based on traditional medicinal chemistry, natural products, or some of the newer chemical technologies that we have discussed in several articles on this blog. Even during the era of industrialized drug discovery, most successful discovery of breakthrough drugs has been via biology-driven drug discovery.

These approaches to drug discovery should then be extended into early-stage development, via employing early stage proof-of-concept (POC) clinical trials to weed out drugs and targets that do not achieve POC. In addition to discussions of POC clinical trials in our 2009 publications, we have outlined specific, sophisticated examples of this strategy in oncology, in our blog posts of October 13, 2010 and of October 25, 2010.

If a company moves toward a strategy of this type, it should not only result in improved effectiveness, but also in very significant cost savings. Moreover, the company should be likely to keep its best researchers, and to motivate them to do their best work and to learn and apply new ways of doing things, in collaboration with biotech and academic partners. However, if the company starts with an emphasis on cost savings and across-the-board R&D workforce reductions without considering R&D and partnering strategies, it will not have solved the R&D productivity problem. That was the main point of our February 19, 2010 blog post.

It is great to outline strategies that appear to be congruent with what has worked in drug discovery in recent years (e.g., biology-driven drug discovery, “drug discovery as an art”), and with some of the best thinking in biotech/pharma companies and of science and technology consultants such as ourselves. However, especially in the case of a strategy that can be outlined in a one-page article (even though we are sure that the article is based on more extensive strategic thinking at GSK), fleshing out and implementing the strategy is easier said than done.

Fostering a pro-innovation environment

Mr. Witty ends his article by saying that the pharmaceutical industry will look very different in five years than it does today. It “will need to put a premium on management and human capital, while operating in an increasingly complex social, legal, scientific and political environment”. Mr. Witty then calls on governments to ensure that pharmaceutical companies can receive a fair reward for innovation, so that they can produce the new breakthrough drugs that patients and physicians need.

This scenario echoes–at least to some extent–a recent speech by Lilly CEO John C. Lechleiter, Ph.D., which we discussed in earlier blog posts. In that speech, Dr. Lechleiter outlined the components of an environment that supports medical innovation. Among these components is what Dr. Lechleiter called “a larger ‘ecosystem’ that allows innovation to flourish”.  Such an ecosystem would include an “atmosphere” that allows innovation to thrive, “nutrients” in the form of monetary investments, and the “seeds” of human talent in relevant scientific disciplines.

In his speech, Dr. Lechleiter called for “public policies that enable and reward medical innovation”. These policies would include those pertaining to benefit/risk assessments, reimbursement decisions, and prescribing guidelines. They would also include “creation of a systematic and transparent regulatory approach to assessing the benefits and risks of new medicines.” Dr. Lechleiter noted the ongoing discussions with the FDA on the Prescription Drug User Fee Act, which is up for reauthorization in 2012. He sees these discussions as offering an opportunity for a “real victory for innovation and for patients.”

In the United States in particular, pharmaceutical and biotechnology companies, working individually and through such industry groups as The Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Industry Organization (BIO), as well as other stakeholders such as universities, “disease organizations”, and patient advocates, need to advocate more effectively through the political process for policies that foster and reward innovation. This should be based on demonstrating to government officials and the public that the industry is making real efforts to improve the productivity of R&D to address medical needs.

___________________________________________________

As the producers of this blog, and as consultants to the biotechnology and pharmaceutical industry, Haberman Associates would like to hear from you. If you are in a biotech or pharmaceutical company, and would like a 15-20-minute, no-obligation telephone discussion of issues raised by this or other blog articles, or of other issues that are important to  your company, please click here. We also welcome your comments on this or any other article on this blog.

Resveratrol

In statements to Fierce Biotech and to the Myeloma Beacon, GlaxoSmihtKline (GSK) said that it has stopped all development of its proprietary resveratrol formulation SRT501. Thanks also to the “In the Pipeline” blog for the information on the Myeloma Beacon statement.

As you all may recall, GSK acquired the sirtuin-pathway specialty company Sirtris (Cambridge, MA) for $720 million in June 2008. This gave GSK ownership of Sirtris’ sirtuin modulator drugs, including SRT501. GSK also appointed Christoph Westphal, then CEO of Sirtris, as the Senior Vice President of GSK’s Centre of Excellence in External Drug Discovery (CEEDD), and Michelle Dipp, then vice president of business development at Sirtris, as Vice President and the head of the US CEEDD at GSK.

According to the Fierce Biotech article, the precipitating factor in GSK’s decision to halt development of SRT501 was the result of a Phase 2a study of the drug in advanced multiple myeloma. The company suspended the study after several patients developed kidney failure. GSK said that in its analysis, the company concluded that SRT501 “may only offer minimal efficacy while having a potential to indirectly exacerbate a renal complication common in this patient population.” It then said that the company has “no further plans to develop SRT501.”

Instead, GSK intends to focus on development of Sirtris’ non-resveratrol synthetic selective sirtuin 1 (SIRT1) activators, which in addition to their greater potency, have more favorably drug-like properties. In its statement to the Myeloma Beacon, GSK in particular mentioned SRT2104 and SRT2379 as the focus of its continuing activity. According to the Sirtris website, SRT2104 is in Phase 2 studies in metabolic and cardiovascular disease, and SRT2379 is in Phase 1 studies in healthy volunteers. Neither compound is currently being tested in cancer.

We discussed Sirtris’ SIRT1 activators in the context of the anti-aging biology field, in a February 10, 2010 blog post. In summary, the mechanism of action of reseveratrol and of Sirtris/GSK’s sirtuin activators is unclear. They apparently activate multiple targets, and they may not be direct SIRT1 activators at all. Nevertheless, Sirtris’ studies of these compounds in mice indicate that they have efficacy in treatment of metabolic diseases. The Phase 2 clinical trials in humans are still ongoing.

To complicate matters further, a study published in the journal Diabetes in March 2010 by NIH researcher Jay H. Chung and his colleagues indicates that resveratrol works indirectly, via the energy sensor AMP-activated protein kinase (AMPK), to activate sirtuins. Since activation of AMPK increases fatty acid oxidation and upregulates mitochondrial biogenesis, the effect of resveratrol on AMPK may be more important than its more indirect activation of sirtuins, at least in the case of metabolic diseases.

Thus Sirtris/GSK’s “sirtuin activators” are under a cloud.

However, as we discussed in our blog posts of November 8, 2009 and February 10, 2010, basic research on anti-aging biology has yielded ample material for drug discovery which may eventually lead to novel treatments for metabolic diseases, and perhaps for other conditions such as various cancers. For example, several companies are developing AMPK activator drugs. Thus there are other avenues for harnessing basic research on anti-aging pathways to discover and develop novel drugs for multiple conditions, even if the Sirtris compounds prove to be a dead end.

_______________________________________________________

As the producers of this blog, and as consultants to the biotechnology and pharmaceutical industry, Haberman Associates would like to hear from you. If you are in a biotech or pharmaceutical company, and would like a 15-20-minute, no-obligation telephone discussion of issues raised by this or other blog articles, or of other issues that are important to  your company, please click here. We also welcome your comments on this or any other article on this blog.

An early example of RNA interference. Source: http://bit.ly/gbXhli

As the author of the recently published book-length report RNAi Therapeutics: Second-Generation Candidates Build Momentum (Insight Pharma Reports, Cambridge Healthtech Institute), in addition to my other involvements with the RNAi therapeutics R&D community, I feel an obligation to comment on the recent announcement from Roche.

As many of you already know, on November 17, 2010, Roche announced that it would cut 4800 jobs (about 6% of their workforce), as part of a $2.4 billion cost-reduction plan. The company also plans to transfer 800 jobs internally, and 700 jobs “to third parties”.

Most of the positions to be cut will be in sales, marketing and manufacturing (especially in Roche’s primary care sales organization) in the United States. However, in R&D, Roche plans to discontinue development of some preclinical drugs. And, most notably for the RNAi research community, Roche will discontinue R&D in RNAi therapeutics, including its RNAi research center in Kulmbach, Germany.

Roche attributed its need to make the cuts to several setbacks in its drug development programs, as well as effects of government health care policy changes in the United States and Europe. The company has also been hit by a drastic falloff in demand for its influenza treatment Tamiflu. Roche is outsourcing sales of Tamiflu to a contract sales organization.

Among Roche’s drug development setbacks have been delays in development of its antidiabetic taspoglutide and its breast cancer drug T-DM1, as well as late-stage clinical failures in studies of its best-selling cancer drug Avastin in prostate, stomach, and early colorectal cancers.

Taspoglutide is a glucagon-like peptide-1 (GLP-1) analog, which Roche has been co-developing with Ipsen. In September 2010, the companies suspended Phase 3 clinical trials due to unexpected adverse effects. in August 2010, the FDA rejected an application for Accelerated Approval of T-DM1, which Roche has been codeveloping with ImmunoGen. The companies will have to complete Phase 3 trials before resubmitting the drug to the FDA, and plan to do so in 2012.

As we said in a February 2010 blog post, Roche (as well as Novartis), unlike most Big Pharmas, had not been emphasizing layoffs and R&D cuts up to that time. However, because of the above setbacks, Roche now sees the need for large reductions in their workforce. Nevertheless, Roche’s R&D cuts appear to be much more selective than those of other Big Pharmas, including those which like Roche have undertaken large acquisitions in 2009, such as Pfizer and Merck.

RNAi therapeutics R&D

Roche’s exit from RNAi therapeutics R&D comes despite the company’s strategic platform alliance with RNAi therapeutics sector leader Alnylam Pharmaceuticals (Cambridge, MA), which was initiated in 2007. That agreement included $313 million in up-front payments, and the purchase of Alnylam’s European research site in Kulmbach, Germany. This site became Roche Kulmbach GmbH, Roche’s Center of Excellence for RNAi therapeutic research, which Roche now plans to close. Roche also had an alliance with RNAi delivery platform company Tekmira Pharmaceuticals (Burnaby, British Columbia, Canada), which also partners with Alnylam to develop and manufacture delivery vehicles for several of Alnylam’s drug candidates.

The withdrawal of Roche from therapeutic RNAi research is the second blow to Alnylam’s alliance strategy this fall. In September 2010, Novartis decided to end its 5-year partnership with Alnylam. As the result of Novartis’ decision, Alnylam carried out a corporate restructuring, including an approximately 25-30% reduction in its workforce. However, Novartis remains very much in the therapeutic RNAi field, as the result of the technology and the rights that it acquired as the result of its partnership with Alnylam. And Alnylam is entitled to receive milestone payments for any RNAi therapeutic products that Novartis develops based on the 31 targets that it has acquired exclusive development rights to from Alnylam.

According to Alnylam’s CEO, John Maraganore, Alnylam was surprised to hear about Roche’s decision to exit therapeutic RNAi. He said, however, that the Roche move would not materially affect Anylam’s financial position or its future plans.

Tekmira’s CEO, Dr. Mark J. Murray, said in a press release that it does not expect Roche’s decision to have a substantive impact on their business. The majority of Tekmira’s revenue comes from its exclusive manufacturing relationship with Alnylam, and its growing relationship with the U.S. government’s Transformational Medical Technologies (TMT) program. This refers to the $140 million contract awarded to Tekmra by the TMT Program, to develop an RNAi-based product for protection against infection with the deadly Ebola virus. Tekmira expects these programs to be its main sources of revenue through 2011, together with its ongoing R&D collaborations with Pfizer, Takeda and Bristol-Myers Squibb (BMS).

As a result of Roche’s exit from RNAi therapeutics R&D, several commentators have been speculating on what other Big Pharmas with internal RNAi programs and/or RNAi alliances (e.g., Pfizer, Merck, BMS, Takeda, Novartis, GlaxoSmithKline, AstraZeneca) might do, and on whether Roche’s move might dampen the prospects for funding of smaller RNAi companies. Others speculate that Roche’s move may simply open up the RNAi market for other competitors. However, this early after Roche’s move, no one knows how valid any of this speculation might be.

As we discussed in our July 13, 2009 blog post, and in more detail in our RNAi Insight Pharma Report, the therapeutic RNAi (and microRNA) field represents an early-stage area of science and technology, with not one drug that has successfully gotten beyond Phase 2 of clinical development. The field may even be technologically premature, as was the monoclonal antibody (MAb) drug field in the 1980s. There are still knowledgeable analysts and industry researchers and executives who believe that RNAi will never yield marketable drugs, or that marketable drugs will be few in number (as is the current situation with antisense and aptamer drugs) and/or be decades away. This is despite the apparent progress in overcoming hurdles to therapeutic RNAi development, and in developing specific drug candidates, as outlined in our report.

In the case of MAb drugs, in the 1980s and early 1990s researchers developed enabling technologies that made it possible for companies to overcoming the hurdles to successful development of marketable products. As a result, in the late 1990s the MAb drug field took off, and is now one of the most successful areas of pharmaceutical development. RNAi companies have been developing enabling technologies (e.g., delivery vehicles, new oligonucleotide structures with greater potency or self-delivering properties) to overcome hurdles to successful RNAi therapeutic development. However, it remains to be seen whether and when such technologies will enable the RNAi therapeutics field to take off the way that MAbs did in the late 1990s.

Why would Big Pharma be interested in getting into such an early-stage and perhaps premature field as RNAi therapeutics? We discuss this issue in detail in our Insight Pharma Report. Among these reasons are the need to fill weak pipelines, and the desire to stake out a commanding position in the RNAi field once it becomes successful, by getting into it early. Big Pharma is trying to avoid repeating its experience with MAb drugs, where it failed to get into the field early, considering it too high-risk. When the MAb sector became highly successful, it was expensive for large pharmaceutical companies to acquire a major stake in it.

Roche, because of its relatively early purchase of a stake in MAb leader Genenetech, and its acquisition of Genentech in 2009, and its strategy to integrate itself with Genentech so as to become essentially a large biopharmaceutical company, may feel less of a need to have internal programs and large alliances in RNAi therapeutic research than other Big Pharma companies. Roche/Genentech currently has a rich pipeline of biologics and small-molecule drugs in clinical development, and in particular continues to develop innovative MAb drugs. For example, the FDA approved Roche/Genentech’s Actemra (tocilizumab) for the treatment of moderate to severe rheumatoid arthritis in January 2010. Actemra is the first interleukin-6 (IL-6) receptor-inhibiting MAb approved for that indication. With its leading position in the MAb/biologics field (including already approved Roche/Genentech blockbusters trastuzumab [Herceptin], bevacizumab [Avastin], and rituximab [Rituxan]), Roche may consider RNAi R&D a “nice to have” instead of a “must have”. Thus, faced with the setbacks that it has experienced in 2010, Roche may feel that it was in its best interests to drop RNAI therapeutics R&D. Other Big Pharma companies with different circumstances may continue with their RNAi internal operations or alliances as part of their long-term pipeline strategies.

Moreover, Roche may have left itself a means to continue to participate in the therapeutic RNAi field without the need to manage internal operations and/or alliances in that area. Roche has a history of spinning off some of its discontinued internal operations as independent companies, while retaining a stake in these entities or options on outlicensed products, and/or collaborating with the spin-offs on newer products. For example, in 1997 Roche researchers started Actelion Ltd., to continue a research program on endothelin receptor antagonists which they had been working on but which Roche decided to discontinue because the projected market was too small for Roche. The spin-out was financed by the venture capital firms Atlas Venture and Sofinnova Partners, which together contributed about $11 million to Actelion’s Series A round. Today Actelion is Switzerland’s largest biotech company (with a U.S. subsidiary), and one of its products, Tracleer (bosentan) for treatment of pulmonary arterial hypertension, has annual sales of more than $1 billion.

In 2000, Roche spun off Basilea Pharmaceutica Ltd. in 2000 to pursue antibiotic and antifungal R&D when Roche decided to exit that area. Basilea was formed by about 50 Roche scientists and executives, with five experimental compounds and 206 million Swiss francs ($214 million) in funding from Roche. Although 51% of the company was sold to private investors, Roche kept options on some of the experimental drugs. Today, Basilea markets Toctino (alitretinoin), a retinoid compound for treatment of severe chronic hand eczema (CHE) which does not respond to the standard topical corticosteroids. It also has a pipeline of antibacterial and antifungal compounds, and conducts earlier-stage research in anti-infectives and oncology. By spinning out Basilea, Roche was able to recoup its investment in anti-infectives.

According to Roche CEO Severin Schwan, Roche might spin off or find partners for its discontinued RNAi therapeutics operations.

We believe that Roche Kulmbach GmbH, Roche’s Center of Excellence for RNAi therapeutic research, might be a good potential candidate for a spin-off. The Kulmbach facility started in 2000 as an independent biotech company, Ribopharma AG. Ribopharma, a spin-off of the University of Bayreuth in Germany, claimed to be the first company to focus on RNAi therapeutics. Alnylam acquired Ribopharma in 2003, and Roche acquired the facility in 2007 as part of its agreement with Alnylam. Might the Kulmbach Center of Excellence become an independent company again as the result of a spin-out? Roche is also planning to close its Madison, Wisconsin facility, which has been conducting therapeutic RNAi R&D. That facility was also once an independent company, Mirus Bio; Roche acquired Mirus Bio in 2008. Roche RNAi researchers in Kulmbach and Madison had collaborated closely. Might Roche/Madison also be a spin-out candidate, either as a stand-alone operation or as part of a combined organization with Kulmbach? At this point, this is all speculation.

If Roche spins out one or more RNAi operations, and retains a stake in these companies, this might provide a way for Roche to participate in the therapeutic RNAi area, without having to manage day-to-day operations. And it might give Roche an opportunity to participate more actively in the field, especially as RNAi-based drugs advance toward market entry. Currently, Roche collaborates with its spin-out company Actelion on development of the selective S1P1 receptor agonist ACT-128800/RG3477 for treatment of multiple sclerosis.  In the future, Roche could enter into similar collaborations with any RNAi companies that it might spin out in 2010/2011.
____________________________________________________

As the producers of this blog, and as consultants to the biotechnology and pharmaceutical industry, Haberman Associates would like to hear from you. If you are in a biotech or pharmaceutical company, and would like a 15-20-minute, no-obligation telephone discussion of issues raised by this or other blog articles, or of other issues that are important to  your company, please click here. We also welcome your comments on this or any other article on this blog.