Wednesday, September 05, 2007

Iconix bows out

One of the end-of-summer news items is that toxicogenomics firm Iconix will be purchased by Entelos, one of the small group of physiology modeling firms out there. The deal is worth between $14.1M and $39M, dependent on certain milestones.

Toxicogenomics is an area which just hasn't panned out as a business model. This was one of Gene Logic's big pushes, but they're mostly seem to be driving on their drug repositioning these days. At least one other company in the area came and went, along with my memory of their name.

Toxicogenomics has a strong appeal. Iconix & Gene Logic at the first level looked very similar: many compounds screened against key toxicology sites (liver, kidney) by microarray & then digested into predictive algorithms. In concept, you run your own compounds in the same models & profile them and then see which patterns come up. If you see a nasty red flag going up, the compound dies early and cheaply.

Iconix had a nice little roadshow that would stop in Boston every 2 years or so with a mix of academic and industrial folks talking about toxicogenomics & its near cousin genomic-profiling-for-mechanism-of-action-determination (MOAmics?). I went to at least two of them: I was interested & it didn't hurt they were free.

As low as $14M seems pretty cheap, and Gene Logic's downplaying of this business also suggests that the market is not strong for these services. Part of the catch is the size of your database: customers aren't going to like to find ugly effects later when they screened more expensive systems. If the Anna Karenina principle extends to toxicology (each unhappy compound is unhappy in its own way, or nearly so, then your database can never be big enough. The rosier view is that you simply get profiles for 'kidney unhappiness' or 'liver unhappiness' which are downstream of the unique insult. In any case, building up big databases of profiles isn't cheap, though that price is falling with various innovations -- so perhaps some of these companies were just too early for their own good.

One of the positions I explored after Millennium had a fair dose of toxicogenomics, suggesting that industry hasn't given up. But it may well be yet another area where Big Pharma doesn't really see the advantage of small biotech in doing it, or perhaps doesn't trust that work to outsiders. Myself, I was involved in a tiny way with one toxicogenomics project at Millennium, which had also decided to mostly go the in-house route (though they did license in the Gene Logic database) -- right before toxicogenomics pretty much disappeared. Actually, that wasn't the first genomics project at Millennium where I arrived just in time for the shutdown -- at least one other project (antibody production) had the same synopsis. Not something I want to think about too hard...

1 comment:

Deepak said...

Keith,

Great post. My experience has been that certain types of content plays just don't work, especially in cases where creating the content is so cheap that you can do it in house or, as it is here, expensive enough, that your content is never sufficient.

I often wonder whether the business models are just plain wrong. There is a certain revenue level which companies like Iconix need to reach, but just looking at the industry, it is almost impossible to get there with the business models used.