The Globe this week had a number of articles on the passing of the $1B biotech bill in Massachusetts and the proxy fight for Biogen Idec. But a third item really raised my eyebrows.
Vertex's CEO Joshua Boger announced that Vertex is contemplating moving out of the state. The apparent driver of this is a concern that Vertex might outgrow the Boston area and that now might be the time to move, before the company grows even larger. Previous discussion of moving had produced a striking plan to relocate to the Boston waterfront.
Now, I'll confess a certain personal interest. I'm probably going to be in this area for most of my employment life, so I don't want to see employers leave (I can see Vertex headquarters from my office). Furthermore, I believe big companies like Vertex, BiogenIdec and such have a beneficial effect on their overall corporate neighborhood -- they tend to grow more talent than they need and those persons tend to start new ventures near the old ones.
Which is the point -- people don't really like to move. Yes, some folks will follow their job to the ends of the earth, but a lot of folks won't. So atop the disruption & distraction of moving, a lot of good people will leave in a short timespan. My general prejudice is that planners recognize such costs but then grossly underestimate them.
Why might Vertex be contemplating such a move? The most cynical explanation is to try to extract tax incentives from either Massachusetts or wherever they move to. Such incentives have driven previous moves or new sites, with mixed success. Rhode Island trumpeted extracting Alpha-Beta from Massachusetts, until Alpha-Beta failed in the clinic and disappeared into the dust.
More practically Boston does have its drawbacks & tradeoffs. Traffic is awful; but that's true of a lot of America. Housing prices are insane. Neither of these encourages new workers. On the other hand, the academic & hospital environment is huge and Boston has a decent transit system, which somewhat offsets the traffic issue. It is striking that so many large biotech & pharma have been trying to move in to Cambridge/Boston over the last decade or so (Merck, Novartis, Schering, Astra, Amgen, Sanofi-Aventis, etc).
But in any case, I return to my main argument. I'm sure Vertex could thrive in many places -- Boston is not Mecca, and if they moved they would recover and thrive again -- but after paying a steep price of disruption & lost talent.
Are there other options? One of course is to stick it out in Boston. Another is to have multiple locations, which incurs its own inefficiencies. No solution is perfect. But please leave migrations for the birds!
Showing posts with label biotech companies. Show all posts
Showing posts with label biotech companies. Show all posts
Friday, June 20, 2008
Thursday, April 10, 2008
Sayonara Millennium?
Boy, if today's news can't break me out of my blogging neglect, then nothing can. Japanese pharma Takeda is buying my old shop for a 50% premium, putting MLNM's share price to a level it hasn't seen since before the Cor merger mistake & market cap at a level unseen since the genomics bubble.
Reports are still coming in, but apparently Takeda is really buying the company -- it is not a raid for the pipeline assets but an attempt to get more or less the whole enchilada. Retention plans are rumored to be in place & it's claimed Dunsire will be staying on. On the other hand, time will tell if Sidney Street will soon feel like a tepanaki table (at least I got the cuisine right this time!) with the chef twirling a large cleaver. A lot of the key folks from Cor were supposed to drive MLNM forward, but they pretty much all bailed after a while.
Management always wanted to get a Japanese deal going, but nothing ever seemed to go beyond secretive hints. Finally, it comes in and it is the ultimate deal.
Many thoughts spring to mind, and perhaps I'll try to cover some later. But in particular, was this the result of a deliberate selling attempt or just some talks that blossomed? Two years ago MLNM refused to sell to an unnamed suitor (though one friend of mine joked about it with a lawyer at a local biotech & decided he'd love to play poker with the lawyer, given the size of the 'tell'); this time Takeda was apparently welcomed with open arms. It will be interesting to see what the merger materials say about the timeline of the deal.
Another key question is how tightly will Takeda attempt to integrate with Millennium? MLNM isn't the same loose place it was when the CEO dressed in drag every October (and just before I got there the high jinx bordered on Animal House), but it still had a soupcon of a laid back atmosphere. Last time I was in the lobby there was a display of each year's T-shirt; not your usual corporate display. I haven't had much dealing with Japanese companies, but this certainly doesn't fit the stereotype. Perhaps Takeda will see the wisdom in a largely hands-off approach, much like Warren Buffett does with his acquisitions -- the parent company funds the subsidiaries but otherwise just acts like a typical board member (though with Buffett, that's still a bit activist). Notable Buffett companies include a prominent local furniture store (where you can go to the movies or try to get free furniture if the Sox sweep the Series again) and the one insurance company unafraid to admit to a reptilian quality.
On the other hand, in theory the greatest value comes from integrating -- cross synergies, reduced duplicative effort, etc. My skepticism of such an approach scales with the distance both physical & cultural, so I doubt it would work. I've recently heard from a former colleague now in a large multi-national pharma how badly its integrated, and it's a company which has had years to do so & common language and nationality.
In any case, I'm sure the weekly sushi day in the cafe will be more popular than ever.
Reports are still coming in, but apparently Takeda is really buying the company -- it is not a raid for the pipeline assets but an attempt to get more or less the whole enchilada. Retention plans are rumored to be in place & it's claimed Dunsire will be staying on. On the other hand, time will tell if Sidney Street will soon feel like a tepanaki table (at least I got the cuisine right this time!) with the chef twirling a large cleaver. A lot of the key folks from Cor were supposed to drive MLNM forward, but they pretty much all bailed after a while.
Management always wanted to get a Japanese deal going, but nothing ever seemed to go beyond secretive hints. Finally, it comes in and it is the ultimate deal.
Many thoughts spring to mind, and perhaps I'll try to cover some later. But in particular, was this the result of a deliberate selling attempt or just some talks that blossomed? Two years ago MLNM refused to sell to an unnamed suitor (though one friend of mine joked about it with a lawyer at a local biotech & decided he'd love to play poker with the lawyer, given the size of the 'tell'); this time Takeda was apparently welcomed with open arms. It will be interesting to see what the merger materials say about the timeline of the deal.
Another key question is how tightly will Takeda attempt to integrate with Millennium? MLNM isn't the same loose place it was when the CEO dressed in drag every October (and just before I got there the high jinx bordered on Animal House), but it still had a soupcon of a laid back atmosphere. Last time I was in the lobby there was a display of each year's T-shirt; not your usual corporate display. I haven't had much dealing with Japanese companies, but this certainly doesn't fit the stereotype. Perhaps Takeda will see the wisdom in a largely hands-off approach, much like Warren Buffett does with his acquisitions -- the parent company funds the subsidiaries but otherwise just acts like a typical board member (though with Buffett, that's still a bit activist). Notable Buffett companies include a prominent local furniture store (where you can go to the movies or try to get free furniture if the Sox sweep the Series again) and the one insurance company unafraid to admit to a reptilian quality.
On the other hand, in theory the greatest value comes from integrating -- cross synergies, reduced duplicative effort, etc. My skepticism of such an approach scales with the distance both physical & cultural, so I doubt it would work. I've recently heard from a former colleague now in a large multi-national pharma how badly its integrated, and it's a company which has had years to do so & common language and nationality.
In any case, I'm sure the weekly sushi day in the cafe will be more popular than ever.
Thursday, December 27, 2007
A Vertex by the sea?
If one thinks like a builder, it is not difficult to scan the prime biotech zone in Cambridge and see it full at some point. I remember bicycling to the Harvard Medical School in the 90's past an empty zone with just a couple of lone buildings; those buildings are now thickly surrounded, save some parkland. There are still some parking lots that might be made over, but in general there isn't a lot of free space left. Some single-story buildings might go (someone must be eyeing the boarded up saloon up the street from Novartis, but not those close to residential land -- which is a lot of them -- and there isn't much room up. Between a general Cantabrigian disdain for high rises & fire department restrictions on where labs can go, up is not a great option for biotech.
Throughout the zone there are also other uses for what space there is. MIT owns much of the land, and must be wondering whether it will be hemmed in. Urban planning has shifted away towards favoring a variety of uses, and so some of the new development in the zone has gone to residences, hotels & shops -- a good thing, too! Hopefully ways will be found to preserve some of the grittier older businesses, the car repair shops & such that are so convenient. But space must be found, or the biotech industry will stagnate.
There is a lot of open space to the far east, where once a large railroad yard sat in the netherlands between Cambridge and Charlestown. New buildings are springing up there & the developers have already advertised in biotech real estate sections.
However, others are thinking of a really big conceptual leap. In a Globe article before Christmas it was revealed that Vertex is contemplating moving their entire operation to new buildings to be constructed at Fan Pier. This is an area just off the center of Boston and on the waterfront, and which is in an area which is becoming a magnet for development. Better road connections, thanks to the Big Dig, a new transit line, a new federal courthouse, and the new convention center have led to other businesses, such as restaurants and hotels.
It's not hard to see the attraction of the place. Walkable to downtown Boston and a short walk to the transit hub (intercity & commuter train, bus, subway) at South Station. Within site (across the water, traversed by a tunnel) of the airport.
The obvious uses of this space were offices (particularly legal ones; the courthouse is next door) -- but biotech? I wouldn't have thought of it, but somebody did. It's a bold move, one to announce that Vertex has arrived as a FIPCO (Fully Integrated Pharmaceutical Company). The developer has already started acquiring permits around buildings suitable for lab space. And the location has other perks -- nearby Red Line access to the Harvard & MIT campuses, so it's almost like being in Cambridge. The new transit line doesn't yet go many places, but if a proposed tunnel is dug it could connect to the Longwood Hospitals area.
Despite all the hubbub in Cambridge, Boston itself doesn't host much biotech. I think there is some incubator-type space over in Charlestown and maybe some bits elsewhere, but mostly the main city plays a subsidiary role. Remote sites such as a derelict state hospital have sometimes been proposed, but nothing much has happened -- perhaps this could jump-start other unconventional locations for biotech in the Hub of the Universe.
Throughout the zone there are also other uses for what space there is. MIT owns much of the land, and must be wondering whether it will be hemmed in. Urban planning has shifted away towards favoring a variety of uses, and so some of the new development in the zone has gone to residences, hotels & shops -- a good thing, too! Hopefully ways will be found to preserve some of the grittier older businesses, the car repair shops & such that are so convenient. But space must be found, or the biotech industry will stagnate.
There is a lot of open space to the far east, where once a large railroad yard sat in the netherlands between Cambridge and Charlestown. New buildings are springing up there & the developers have already advertised in biotech real estate sections.
However, others are thinking of a really big conceptual leap. In a Globe article before Christmas it was revealed that Vertex is contemplating moving their entire operation to new buildings to be constructed at Fan Pier. This is an area just off the center of Boston and on the waterfront, and which is in an area which is becoming a magnet for development. Better road connections, thanks to the Big Dig, a new transit line, a new federal courthouse, and the new convention center have led to other businesses, such as restaurants and hotels.
It's not hard to see the attraction of the place. Walkable to downtown Boston and a short walk to the transit hub (intercity & commuter train, bus, subway) at South Station. Within site (across the water, traversed by a tunnel) of the airport.
The obvious uses of this space were offices (particularly legal ones; the courthouse is next door) -- but biotech? I wouldn't have thought of it, but somebody did. It's a bold move, one to announce that Vertex has arrived as a FIPCO (Fully Integrated Pharmaceutical Company). The developer has already started acquiring permits around buildings suitable for lab space. And the location has other perks -- nearby Red Line access to the Harvard & MIT campuses, so it's almost like being in Cambridge. The new transit line doesn't yet go many places, but if a proposed tunnel is dug it could connect to the Longwood Hospitals area.
Despite all the hubbub in Cambridge, Boston itself doesn't host much biotech. I think there is some incubator-type space over in Charlestown and maybe some bits elsewhere, but mostly the main city plays a subsidiary role. Remote sites such as a derelict state hospital have sometimes been proposed, but nothing much has happened -- perhaps this could jump-start other unconventional locations for biotech in the Hub of the Universe.
Tuesday, November 20, 2007
Gene Logic successfully repositions, Ore What?
Gene Logic today announced that Pfizer has filed a patent based on a Gene Logic drug repositioning effort. This would appear to be one of the most significant votes of confidence in such efforts by an outside partner.
Drug repositioning is the idea of finding new therapeutic uses for advanced compounds, particularly compounds which are very advanced but failed due to poor efficacy in the originally targeted disease. A number of companies have sprung up in this field -- the two I am most familiar with are Gene Logic and Genstruct -- and at least some large pharmas have in-house programs.
The reality is that many existing drugs have origins in therapeutic areas which are quite different than those they started in. Perhaps the most notorious case is Viagra, which was muddling along as an anti-hypertensive until an unusual side effect was spotted. Minoxidil similarly began in the anti-hypertensive until its side effect was noted. The route to some psychiatric medications began with anti-tuberculosis agents and antihistamines. I doubt that's a complete list.
Gene Logic is one of the original cohort of genomics companies and has been through many iterations of business plan. If memory serves, they were one of several companies originally built around a differential display technology, a way of obtaining mRNA signatures for diseases which predated microarrays. Gene Logic later became one of the major players in the toxicogenomics space, and as part of that effort built a large in-house Affy-based microarray effort. They built microarray databases for a number of disease areas (I've used their oncology database), built a sizable bioinformatics effort, and even acquired their own CRO.
However, none of that could quite be converted into a stream of gold, so over the last year or so the whole mess has been deconstructed, leaving behind the drug repositioning business which had begun as a unit of Millennium (which is one reason I'm familiar with it). They'll even be changing their name soon, to Ore Pharmaceuticals (presumably Overburden and Slag, while appropriate for the mining theme, did not last long in the naming queue).
While there is certainly historical precedent for repositioning, the question remains whether companies can make money doing it, and whether those companies will simply be the big pharmas or the gaggle of biotechs chasing after the concept. Depending on the company, some mixture of in vivo models, in vitro models and computational methods are used. One way to think of it is doing drug discovery, but with a compound which already has safety data on it. There is also extensive interest in the concept in the academic sector, which is a very good thing -- many drugs which may be repositionable have little or no patent life yet, meaning companies will find it difficult to invest in them with any hope for a return.
Gene Logic / Ore has one repositioned drug which has gone through clinical trials, GL1001 (nee MLN4760). This is a drug originally developed by Millennium as an ACE2 inhibitor. Since I'm among the discoverers of ACE2, I tend to key an eye on this one. Millennium gave it a whirl in obesity, but now Gene Logic has found a signal in inflammatory bowel disease in animal models.
That Pfizer bothered to file a patent is significant, as it triggered a milestone payment -- amount unspecified, but these are usually something interesting. But that is still a long way from starting a new trial -- that will be the real milestone, and whichever drug repositioning firm can claim that will really be crowing -- that is, until somebody actually gets a drug approved this way.
Drug repositioning is the idea of finding new therapeutic uses for advanced compounds, particularly compounds which are very advanced but failed due to poor efficacy in the originally targeted disease. A number of companies have sprung up in this field -- the two I am most familiar with are Gene Logic and Genstruct -- and at least some large pharmas have in-house programs.
The reality is that many existing drugs have origins in therapeutic areas which are quite different than those they started in. Perhaps the most notorious case is Viagra, which was muddling along as an anti-hypertensive until an unusual side effect was spotted. Minoxidil similarly began in the anti-hypertensive until its side effect was noted. The route to some psychiatric medications began with anti-tuberculosis agents and antihistamines. I doubt that's a complete list.
Gene Logic is one of the original cohort of genomics companies and has been through many iterations of business plan. If memory serves, they were one of several companies originally built around a differential display technology, a way of obtaining mRNA signatures for diseases which predated microarrays. Gene Logic later became one of the major players in the toxicogenomics space, and as part of that effort built a large in-house Affy-based microarray effort. They built microarray databases for a number of disease areas (I've used their oncology database), built a sizable bioinformatics effort, and even acquired their own CRO.
However, none of that could quite be converted into a stream of gold, so over the last year or so the whole mess has been deconstructed, leaving behind the drug repositioning business which had begun as a unit of Millennium (which is one reason I'm familiar with it). They'll even be changing their name soon, to Ore Pharmaceuticals (presumably Overburden and Slag, while appropriate for the mining theme, did not last long in the naming queue).
While there is certainly historical precedent for repositioning, the question remains whether companies can make money doing it, and whether those companies will simply be the big pharmas or the gaggle of biotechs chasing after the concept. Depending on the company, some mixture of in vivo models, in vitro models and computational methods are used. One way to think of it is doing drug discovery, but with a compound which already has safety data on it. There is also extensive interest in the concept in the academic sector, which is a very good thing -- many drugs which may be repositionable have little or no patent life yet, meaning companies will find it difficult to invest in them with any hope for a return.
Gene Logic / Ore has one repositioned drug which has gone through clinical trials, GL1001 (nee MLN4760). This is a drug originally developed by Millennium as an ACE2 inhibitor. Since I'm among the discoverers of ACE2, I tend to key an eye on this one. Millennium gave it a whirl in obesity, but now Gene Logic has found a signal in inflammatory bowel disease in animal models.
That Pfizer bothered to file a patent is significant, as it triggered a milestone payment -- amount unspecified, but these are usually something interesting. But that is still a long way from starting a new trial -- that will be the real milestone, and whichever drug repositioning firm can claim that will really be crowing -- that is, until somebody actually gets a drug approved this way.
Tuesday, September 25, 2007
A First Commercial Nanopore Foray?
Today's GenomeWeb carried the news that Sequenom has licensed a bit of nanopore technology with the intent of developing a DNA sequencer with it. The press release teases us with the possibility of sub-kilodollar human genomes.
Nanopores are an approach which has been around for at least a decade-and-a-half -- a postdoc was working on it when I showed up in the Church lab in 1992. The general concept is to observe single nucleic acid molecules traversing through a pore. It's a great concept, but has proven difficult to turn into reality. I'm unaware of a true proof-of-concept publication showing significant sequence reads using nanopores, though I won't claim to have really dug in the literature. Even such an experiment would represent a small step but not an imminent technology -- the first polony sequencing paper was in 1999 and only in the last few years has that approach really been made to work.
Which is one reason I'm a bit apprehensive as to who bought the technology. Sequenom has done interesting things and has a great name (I had independently thought of it before the company formed; if only I had thought to cybersquat!). But, they have had a rough time in the marketplace, and were even threatened with NASDAQ delisting a bit over a year ago. Their stock has climbed from that trough, but they're hardly flush: only $33M in the bank and still burning cash at a furious rate. Can Sequenom really invest what it will take to bring nanopores to an operational state, or will nanopores be stuck with a weak dance partner which steps on its toes? I hope they pull it off, but it's hard to be optimistic.
It would also be nice to learn more about the technology. I found the most recent publication of the group, but it is (alas!) in a non-open access journal (Clinical Chemistry, though oddly Entrez claims it is). I might spring the $15 to read it, but that's not exactly a good habit to get into. The most enticing bit in that the current version apparently relies on generating cleverly-labeled DNA polymers that somehow transfer the original sequence information ("Designed DNA polymers") and then detecting the sequence due to passage through the nanopore activating the labels. It sounds clever, but moves away from the original vision of really, really long read lengths by reading DNA directly through the nanopore. The question then becomes how accurate is that conversion process and what sorts of artifacts does it generate?
Nanopores are an approach which has been around for at least a decade-and-a-half -- a postdoc was working on it when I showed up in the Church lab in 1992. The general concept is to observe single nucleic acid molecules traversing through a pore. It's a great concept, but has proven difficult to turn into reality. I'm unaware of a true proof-of-concept publication showing significant sequence reads using nanopores, though I won't claim to have really dug in the literature. Even such an experiment would represent a small step but not an imminent technology -- the first polony sequencing paper was in 1999 and only in the last few years has that approach really been made to work.
Which is one reason I'm a bit apprehensive as to who bought the technology. Sequenom has done interesting things and has a great name (I had independently thought of it before the company formed; if only I had thought to cybersquat!). But, they have had a rough time in the marketplace, and were even threatened with NASDAQ delisting a bit over a year ago. Their stock has climbed from that trough, but they're hardly flush: only $33M in the bank and still burning cash at a furious rate. Can Sequenom really invest what it will take to bring nanopores to an operational state, or will nanopores be stuck with a weak dance partner which steps on its toes? I hope they pull it off, but it's hard to be optimistic.
It would also be nice to learn more about the technology. I found the most recent publication of the group, but it is (alas!) in a non-open access journal (Clinical Chemistry, though oddly Entrez claims it is). I might spring the $15 to read it, but that's not exactly a good habit to get into. The most enticing bit in that the current version apparently relies on generating cleverly-labeled DNA polymers that somehow transfer the original sequence information ("Designed DNA polymers") and then detecting the sequence due to passage through the nanopore activating the labels. It sounds clever, but moves away from the original vision of really, really long read lengths by reading DNA directly through the nanopore. The question then becomes how accurate is that conversion process and what sorts of artifacts does it generate?
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...
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...
Wednesday, August 08, 2007
Peeking in on the Old Homestead
I had the occasion to walk by 640 Memorial Drive, the building in which I spent half of my Millennium career. It's a grand old building with an interesting history.
640 was original built by Henry Ford as an automobile assembly plant located close to a major market -- shipping cars from Michigan was proving troublesome and he wanted an alternative. To economize on land, he envisioned a semi-vertical assembly line -- the standard assembly line would be folded into a series of floors. Giant overhead cranes would lift parts and semi-completed assemblies between floors. The scheme proved impractical, and Ford later built a conventional assembly line over in Somerville. The building went through a number of industrial uses, including being a Polaroid camera assembly plant. It was apparently quite an eyesore in the late 80's, but by the time I first noticed it in the mid-90's it had been rehabbed very nicely. The huge bay once ranged by the cranes is now a soaring atrium & the site of the old railyard is parking.
When I interviewed at Millennium in 1996 they occupied top 2 floors, and by the time I arrived a portion of the middle (3rd) floor had been taken, plus the mouse facility in the basement. Eventually, another major tenant in the building (who made medical alert bracelet systems) was enticed to vamoose, leaving only a single other tenant (a pathology lab).
Around the time I moved back into 640 in 1999 there was a huge effort to fit out all this space. But, before a few years passed Millennium started its deflation and the parking lot starting getting empty again. Eventually, everyone moved out, leaving Millennium with an empty building with a lot of lease left on it.
I peered in a few windows and was surprised to see more occupied than expected. I didn't have time to browse a lot, but while some 1st floor offices were clearly vacant some of the space on the 2nd and 3rd floors were clearly occupied -- though I think my old haunt wasn't. I know there was at least recently some significant lab space vacant, as Codon took a look at it.
Millennium has, of course, been trying to unload the space ever since they moved out. Because it was lumped into restructuring costs, the space was absolutely off-limits -- even when a major power failure crippled the other buildings, 640 was not even seriously considered -- accounting rules are rules.
Which brings up a question. A major reason for vacating buildings was to save money, and even renting empty space is cheaper than having it occupied (light, heat, security, IT support, etc). But, a huge chunk of the cost savings were supposed to come from subletting the space -- a story repeated with other facilities. I wonder how big the gap is (and how fast it is growing) between projected savings and actual ones. Perhaps its buried in a financial statement somewhere, but it is certainly not a bit of forecasting anybody is going to be crowing about.
640 was original built by Henry Ford as an automobile assembly plant located close to a major market -- shipping cars from Michigan was proving troublesome and he wanted an alternative. To economize on land, he envisioned a semi-vertical assembly line -- the standard assembly line would be folded into a series of floors. Giant overhead cranes would lift parts and semi-completed assemblies between floors. The scheme proved impractical, and Ford later built a conventional assembly line over in Somerville. The building went through a number of industrial uses, including being a Polaroid camera assembly plant. It was apparently quite an eyesore in the late 80's, but by the time I first noticed it in the mid-90's it had been rehabbed very nicely. The huge bay once ranged by the cranes is now a soaring atrium & the site of the old railyard is parking.
When I interviewed at Millennium in 1996 they occupied top 2 floors, and by the time I arrived a portion of the middle (3rd) floor had been taken, plus the mouse facility in the basement. Eventually, another major tenant in the building (who made medical alert bracelet systems) was enticed to vamoose, leaving only a single other tenant (a pathology lab).
Around the time I moved back into 640 in 1999 there was a huge effort to fit out all this space. But, before a few years passed Millennium started its deflation and the parking lot starting getting empty again. Eventually, everyone moved out, leaving Millennium with an empty building with a lot of lease left on it.
I peered in a few windows and was surprised to see more occupied than expected. I didn't have time to browse a lot, but while some 1st floor offices were clearly vacant some of the space on the 2nd and 3rd floors were clearly occupied -- though I think my old haunt wasn't. I know there was at least recently some significant lab space vacant, as Codon took a look at it.
Millennium has, of course, been trying to unload the space ever since they moved out. Because it was lumped into restructuring costs, the space was absolutely off-limits -- even when a major power failure crippled the other buildings, 640 was not even seriously considered -- accounting rules are rules.
Which brings up a question. A major reason for vacating buildings was to save money, and even renting empty space is cheaper than having it occupied (light, heat, security, IT support, etc). But, a huge chunk of the cost savings were supposed to come from subletting the space -- a story repeated with other facilities. I wonder how big the gap is (and how fast it is growing) between projected savings and actual ones. Perhaps its buried in a financial statement somewhere, but it is certainly not a bit of forecasting anybody is going to be crowing about.
Thursday, June 28, 2007
Psst! Hot Stock Tip! This company is going to be average!
The last two days have been active on the NASDAQ for the old stomping grounds. Prior to the trading day yesterday a stock analyst upgraded the stock, and MLNM gained about 6% on the day with a trading volume significantly (but less than 2X) above average volume. Today, the company announced some positive results in front-line multiple myeloma treatment, and the stock again turned over 5M+ shares but just nudged up a bit.
What is more than a little funny about yesterday is what the analyst actually said: instead of 'underperforming' the market, he expected Millennium to "Mkt Perform" -- that's right, that it would be exactly middling, spectacularly average, impressively ordinary. Indeed, he put a target on the stock -- $10, or a bit less than what it was selling for that day. For that he was credited with sparking the spike.
What's even more striking is that the day before another investment house downgraded Millennium from 'Overweight' to 'Equal weight'. Each company picks its own jargon, but this is really agreeing -- they both predict Millennium to do as well as the market. Oy!
Far more likely a cause in the spike was leakage of the impending good myeloma news. I've never looked systematically, but good news in biotech seems to be preceded by trading spikes as much as it is followed by them. Periodically someone is nailed for it (and not just domestic design goddesses), but there is probably a lot of leakage that can never be pursued.
I'm sure there are a lot of smart people earning money as stock analysts who carefully consider all the facts and give a well-reasoned opinion free of bias, but they ain't easy to find. For a while I listened to the webcasts of Millennium conference calls, but after a while I realized that (a) no new information came out and (b) some of the questions were too dumb to listen to. Analysts would frequently ask questions whose answer restated what had just been presented, or would ask loaded questions which were completely at odds with the prior presentation. How the senior management answered some of those with a straight face is a testament to their discipline; I would have been lucky to get by with a slight grimace. Some analysts were clearly chummy with company X, and others with company Y, and little could change their minds.
If you look at the whole thing scientifically, the answer is pretty clear: listening to stock analysts is a terrible way to invest. If you want average returns, invest in index funds. If you want to soundly beat the averages, start looking for leprechauns -- their pots of gold are far more plentiful than functional stock picking schemes. Buy a copy of 'A Random Walk on Wall Street' and sleep easy at night. Yes, there are a few pickers who have done well, but they are so rare they are household names. Plus, there are other challenges: Warren Buffett has an impressive track record, but if he continues it until my retirement his financial longevity will not be the point of amazement.
Disclosure: somewhere in the bank lock box I have a few shares of Millennium left -- I think totaling to about the same as the blue book value on my 11-year old car (though perhaps closer to the eBay value of my used iPod). The fact they are in a bank protected them from the grand post layoff clean out.
What is more than a little funny about yesterday is what the analyst actually said: instead of 'underperforming' the market, he expected Millennium to "Mkt Perform" -- that's right, that it would be exactly middling, spectacularly average, impressively ordinary. Indeed, he put a target on the stock -- $10, or a bit less than what it was selling for that day. For that he was credited with sparking the spike.
What's even more striking is that the day before another investment house downgraded Millennium from 'Overweight' to 'Equal weight'. Each company picks its own jargon, but this is really agreeing -- they both predict Millennium to do as well as the market. Oy!
Far more likely a cause in the spike was leakage of the impending good myeloma news. I've never looked systematically, but good news in biotech seems to be preceded by trading spikes as much as it is followed by them. Periodically someone is nailed for it (and not just domestic design goddesses), but there is probably a lot of leakage that can never be pursued.
I'm sure there are a lot of smart people earning money as stock analysts who carefully consider all the facts and give a well-reasoned opinion free of bias, but they ain't easy to find. For a while I listened to the webcasts of Millennium conference calls, but after a while I realized that (a) no new information came out and (b) some of the questions were too dumb to listen to. Analysts would frequently ask questions whose answer restated what had just been presented, or would ask loaded questions which were completely at odds with the prior presentation. How the senior management answered some of those with a straight face is a testament to their discipline; I would have been lucky to get by with a slight grimace. Some analysts were clearly chummy with company X, and others with company Y, and little could change their minds.
If you look at the whole thing scientifically, the answer is pretty clear: listening to stock analysts is a terrible way to invest. If you want average returns, invest in index funds. If you want to soundly beat the averages, start looking for leprechauns -- their pots of gold are far more plentiful than functional stock picking schemes. Buy a copy of 'A Random Walk on Wall Street' and sleep easy at night. Yes, there are a few pickers who have done well, but they are so rare they are household names. Plus, there are other challenges: Warren Buffett has an impressive track record, but if he continues it until my retirement his financial longevity will not be the point of amazement.
Disclosure: somewhere in the bank lock box I have a few shares of Millennium left -- I think totaling to about the same as the blue book value on my 11-year old car (though perhaps closer to the eBay value of my used iPod). The fact they are in a bank protected them from the grand post layoff clean out.
Wednesday, June 27, 2007
Roche munches again
Roche is on quite a little acquisition spree in the diagnostics business: first went 454 with its first-to-market sequencing-by-synthesis technology, earlier this month it was DNA microarray manufacturer NimbleGen in another friendly action, and now Roche has launched a hostile bid for immunodiagostics company Ventana.
Three companies, three technologies with proven or developing relevance to diagnostics. What else might be in the radar? One possibility would be protein microarrays, though there are few players in the functional array space (useful for scanning patient responses) -- but perhaps an antibody capture array company? Not yet a proven technology, but one to watch.
All of these buys have a strong personalized medicine / genomics-driven medicine angle. Ventana makes an assay for HER2 to complement Genentech/Roche's Herceptin (Roche owns a big chunk of Genentech & I think is the ex-US distributor); 454 and Nimblegen are solidly in the genomics arena. Roche already has Affy-based chips out for drug metabolizing enzyme polymorphisms.
Three companies, three technologies with proven or developing relevance to diagnostics. What else might be in the radar? One possibility would be protein microarrays, though there are few players in the functional array space (useful for scanning patient responses) -- but perhaps an antibody capture array company? Not yet a proven technology, but one to watch.
All of these buys have a strong personalized medicine / genomics-driven medicine angle. Ventana makes an assay for HER2 to complement Genentech/Roche's Herceptin (Roche owns a big chunk of Genentech & I think is the ex-US distributor); 454 and Nimblegen are solidly in the genomics arena. Roche already has Affy-based chips out for drug metabolizing enzyme polymorphisms.
Tuesday, May 08, 2007
A Tale of Two Drugs
The BIO convention has unleashed a flurry of opinion items on drug pricing bemoaning the high prices of drugs coming out of biotech. While few are as absurd as the one Derek Lowe skewered today, they are coming from voices taken very seriously. Marcia Angell, former New England Journal of Medicine editor-in-chief, was quoted that biotech companies can charge whatever they want due to holding monopolies on their treatments, whereas today's Globe had an op-ed from Harvard prof Jerry Avorn all but proposing a tax on biotech drugs to be earmarked for NIH funding.
In the end the claim is that drug prices could be much, much lower but real pharmaceutical innovation would be preserved or even enhanced. Angell in particular seems to be fond of the White Queen's habit of believing impossible things; a run of Op-Eds from her this year in the Globe alternately excoriated the pharmaceutical industry for spending R&D dollars 'me-too' drug development followed by celebrating that the availability of multiple closely related compounds enabled large payers to bargain with pharma companies over dispensary prices. Angell also fails to explain why companies which can charge 'whatever they want to' don't charge more -- are they idiots? Or is the world really not so neat and tidy.
I'd like to use the stories of two drugs from my former shop to illustrate how complex reality is. The two drugs are Velcade and MLN-02, both entering Millennium's portfolio through the acquisition of Leukosite. Two or so other drugs from other companies will also make appearances, though that's getting ahead of ourselves.
Velcade is Millennium's biggest drug. Nobody can claim it is 'me too': it is the first proteasome inhibitor ever to enter the clinic, and is still the only approved one. Velcade has been approved to treat two cancers of B-cells, multiple myleoma and mantle cell lymphoma. That short list is not for lack of trying: between Millennium, the NCI and individual investigators it has probably been thrown at virtually every known cancer, alone or in combination with standard chemotherapy agents. Positive signals are few and far between and have the nasty habit of disappearing once the trials get large. In many cases, the right dosing or combination may not have been found yet, so oncologists continue to explore Velcade even in indications where it has not succeeded previously.
Now Millennium and its pharma partner J&J do market Velcade, but the effort is quite modest (I don't have numbers, but the U.S. sales force I think is a few hundred). Millennium continues to plow cash into Velcade trials in the hopes of hitting a significant jackpot; MM & MCL are important but won't drive sales to the stratosphere. Velcade was the first agent in over forty years to demonstrate a survival advantage in second line myeloma. Yet Millennium's stock price is stagnant and the company is trimming expenses annually. So why isn't Millennium in clover?
The answer quite simply is competition. Celgene had thalidomide, with its dark history, and thal is quite useful in myleoma. Thal is oral, whereas Velcade is injectable, and convenience wins all other things being equal -- and at the moment there is not hard evidence to say the two drugs aren't comparably effective. But what's really knocking Millennium around is the thalidomide follow-on Revlimid, which is claimed to be significantly less teratogenic. Now Rev is a follow-on and chemically related to thalidomide -- is this a me-too? Revlimid is also oral and is already looking good in front line trials of myeloma, where Millennium hoped to expand Velcade into -- that will probably be successful, but it will be another the same dogfight all over again.
Note that this competition has some very real effects. It is chic in some circles to sneer at worrying about stock prices, but that stock is a very real mechanism for raising money to plow into further R&D. Millennium is still an independent company because it was lucky enough to issue stock near the peak of the biotech bubble; money is still marching out the door faster than it marches in.
Now let's look at MLN02, another drug with an interesting story. MLN02 is an antibody which targets certain integrins, heterodimeric extracellular protein molecules important for the recruitment of immune cells to sites of inflammation. MLN02 targets an integrin believed to be specific to the gut, and so might offer a very specific approach to downregulating excessive immune activity in ulcerative colitis and Crohn's disease.
MLN02 has had a rocky history at Milllennium. Leukosite had partnered with Genentech on the drug, but Genentech later bailed out. A paper was published in the New England Journal with the results of a large study, but even these results are not as clear as one might like. In any case, the development of MLN02 has at times been a top priority on Landsdowne Street, but at other times the drug was essentially tabled. Why?
A lot has to do with the competitive landscape. Crohn's and UC are not huge markets, so dividing the market up isn't very attractive -- especially if the competitor gets there first. The first entrant advantage is quite large in pharmaceuticals. So the tea leaves are read daily -- and the newswires scanned obsessively -- to see what the competition was up to.
One development which iced down MLN02 enthusiasm greatly was the accelerated development of another biotech company's integrin targeting drug -- and that company was large and successful. Their drug would go first for another indication, but might hit Crohn's and/or UC prior to MLN02 could be expected to get there. With lots of safety data from the other indication & some of the same docs prescribing in both areas, the deck would be stacked against a new entrant -- even if MLN02 had the theoretical advantage of being gut-specific. Launch of the potential competitor in the other indication ahead of schedule did not help matters any.
What heated up MLN02 interest again was what happened to that competitor, as it was Biogen's Avonex. Avonex works in MS, but in a very small number of patients a lethal viral infection was enabled by the drug. Suddenly, the competitive landscape was altered -- though with a new regulatory challenge of convincing the regulators that MLN02 really doesn't alter lymphocyte trafficking in the brain.
To some degree, the numbers folks were daily running estimates of what the expected gain from MLN02 would be, given the competitive landscape (I've left the other big player, Remicade, out of the story -- and it is probably going to waltz all over these markets). Even when Avonex was in trouble the models suggested that MLN02 might end up being a money pit after all -- depending on its efficacy and the price payers were willing to pay for it. Biotech has proven many times it is possible to fail by succeeding; your drug works, but not well enough to make it to market -- and there are no money-back guarantees on clinical trials.
Like it or not, money is the lifeblood of pharmaceutical development. Trials are expensive. No matter how much you hacked away at marketing or executive salaries at Millennium, the brutal reality of costly trials and ever changing competitive markets would prevail. We might want to pay less for new medications and perhaps through price caps or other government fiats society may accomplish this desire. But to claim that new drugs will continue to flow as before is to ignore the real world -- dlrugs go forward which are predicted to pay for their development costs and cover the money sunk into expensive failures. Cut the reimbursement rates and you inevitably negatively change the risk-reward perception for every project in development. Some will survive, but many, particularly the MLN02s of the world, will not.
In the end the claim is that drug prices could be much, much lower but real pharmaceutical innovation would be preserved or even enhanced. Angell in particular seems to be fond of the White Queen's habit of believing impossible things; a run of Op-Eds from her this year in the Globe alternately excoriated the pharmaceutical industry for spending R&D dollars 'me-too' drug development followed by celebrating that the availability of multiple closely related compounds enabled large payers to bargain with pharma companies over dispensary prices. Angell also fails to explain why companies which can charge 'whatever they want to' don't charge more -- are they idiots? Or is the world really not so neat and tidy.
I'd like to use the stories of two drugs from my former shop to illustrate how complex reality is. The two drugs are Velcade and MLN-02, both entering Millennium's portfolio through the acquisition of Leukosite. Two or so other drugs from other companies will also make appearances, though that's getting ahead of ourselves.
Velcade is Millennium's biggest drug. Nobody can claim it is 'me too': it is the first proteasome inhibitor ever to enter the clinic, and is still the only approved one. Velcade has been approved to treat two cancers of B-cells, multiple myleoma and mantle cell lymphoma. That short list is not for lack of trying: between Millennium, the NCI and individual investigators it has probably been thrown at virtually every known cancer, alone or in combination with standard chemotherapy agents. Positive signals are few and far between and have the nasty habit of disappearing once the trials get large. In many cases, the right dosing or combination may not have been found yet, so oncologists continue to explore Velcade even in indications where it has not succeeded previously.
Now Millennium and its pharma partner J&J do market Velcade, but the effort is quite modest (I don't have numbers, but the U.S. sales force I think is a few hundred). Millennium continues to plow cash into Velcade trials in the hopes of hitting a significant jackpot; MM & MCL are important but won't drive sales to the stratosphere. Velcade was the first agent in over forty years to demonstrate a survival advantage in second line myeloma. Yet Millennium's stock price is stagnant and the company is trimming expenses annually. So why isn't Millennium in clover?
The answer quite simply is competition. Celgene had thalidomide, with its dark history, and thal is quite useful in myleoma. Thal is oral, whereas Velcade is injectable, and convenience wins all other things being equal -- and at the moment there is not hard evidence to say the two drugs aren't comparably effective. But what's really knocking Millennium around is the thalidomide follow-on Revlimid, which is claimed to be significantly less teratogenic. Now Rev is a follow-on and chemically related to thalidomide -- is this a me-too? Revlimid is also oral and is already looking good in front line trials of myeloma, where Millennium hoped to expand Velcade into -- that will probably be successful, but it will be another the same dogfight all over again.
Note that this competition has some very real effects. It is chic in some circles to sneer at worrying about stock prices, but that stock is a very real mechanism for raising money to plow into further R&D. Millennium is still an independent company because it was lucky enough to issue stock near the peak of the biotech bubble; money is still marching out the door faster than it marches in.
Now let's look at MLN02, another drug with an interesting story. MLN02 is an antibody which targets certain integrins, heterodimeric extracellular protein molecules important for the recruitment of immune cells to sites of inflammation. MLN02 targets an integrin believed to be specific to the gut, and so might offer a very specific approach to downregulating excessive immune activity in ulcerative colitis and Crohn's disease.
MLN02 has had a rocky history at Milllennium. Leukosite had partnered with Genentech on the drug, but Genentech later bailed out. A paper was published in the New England Journal with the results of a large study, but even these results are not as clear as one might like. In any case, the development of MLN02 has at times been a top priority on Landsdowne Street, but at other times the drug was essentially tabled. Why?
A lot has to do with the competitive landscape. Crohn's and UC are not huge markets, so dividing the market up isn't very attractive -- especially if the competitor gets there first. The first entrant advantage is quite large in pharmaceuticals. So the tea leaves are read daily -- and the newswires scanned obsessively -- to see what the competition was up to.
One development which iced down MLN02 enthusiasm greatly was the accelerated development of another biotech company's integrin targeting drug -- and that company was large and successful. Their drug would go first for another indication, but might hit Crohn's and/or UC prior to MLN02 could be expected to get there. With lots of safety data from the other indication & some of the same docs prescribing in both areas, the deck would be stacked against a new entrant -- even if MLN02 had the theoretical advantage of being gut-specific. Launch of the potential competitor in the other indication ahead of schedule did not help matters any.
What heated up MLN02 interest again was what happened to that competitor, as it was Biogen's Avonex. Avonex works in MS, but in a very small number of patients a lethal viral infection was enabled by the drug. Suddenly, the competitive landscape was altered -- though with a new regulatory challenge of convincing the regulators that MLN02 really doesn't alter lymphocyte trafficking in the brain.
To some degree, the numbers folks were daily running estimates of what the expected gain from MLN02 would be, given the competitive landscape (I've left the other big player, Remicade, out of the story -- and it is probably going to waltz all over these markets). Even when Avonex was in trouble the models suggested that MLN02 might end up being a money pit after all -- depending on its efficacy and the price payers were willing to pay for it. Biotech has proven many times it is possible to fail by succeeding; your drug works, but not well enough to make it to market -- and there are no money-back guarantees on clinical trials.
Like it or not, money is the lifeblood of pharmaceutical development. Trials are expensive. No matter how much you hacked away at marketing or executive salaries at Millennium, the brutal reality of costly trials and ever changing competitive markets would prevail. We might want to pay less for new medications and perhaps through price caps or other government fiats society may accomplish this desire. But to claim that new drugs will continue to flow as before is to ignore the real world -- dlrugs go forward which are predicted to pay for their development costs and cover the money sunk into expensive failures. Cut the reimbursement rates and you inevitably negatively change the risk-reward perception for every project in development. Some will survive, but many, particularly the MLN02s of the world, will not.
Friday, May 04, 2007
Biotech Buildings
I had the opportunity today to attend an event at the Genzyme Center and boy is that building a stunner. A soaring atrium contains mobiles which cast rainbows all over the space. There are watercourses and plantings at ground level, glass elevators -- more of a hotel lobby than an office building.
Novartis' Cambridge facility also has a nice atrium, though a bit more staid. Cell Signalling Technologies' lobby on the North Shore resembles a small jungle.
Biotech buildings in Cambridge are a mix. Some renovated older buildings are quite attractive, and some really are pretty plain. New buildings are a mix too. Space is precious, so those atria really shout 'we can afford it!'. Millennium's first custom building (75 Sidney) had a small atrium with a spiral stair (alas, not a double spiral!), but the later buildings used decorative ornamentation (granite in the bathrooms!) and non-rectangular walls in place of unusable air space.
Much as old banks built solid buildings with serious marble & columns to emphasize their solidity & seriousness, so too does a flashy building speak of a company's confidence in its future. Of course, such confidence is all too often misplaced. As a graduate student I watched Hybridon's headquarters emerge from a rehabbed tire warehouse, but then at Millennium I got to see the gorgeous inside -- because Hybridon was subletting the space to us. One company going up, another going down. Later, Millennium started shedding space and discovered that two story atria with a staircase looks nice, but doesn't make subletting the building a floor at a time practical without some changes.
It is also useful to be skeptical of some of the touted benefits of architecture. I am a fan of good architecture, but what looks good doesn't always work well. I love seeing Frank Lloyd Wright houses, but living in one is reputed to require some getting used to. All glass conference room walls may emphasize openess & light, but sometimes you don't really want to be a goldfish. MIT's Stata center is very funky, but just try finding an office in there (and worse, the interior is dead for at least one major cellphone carrier, meaning you can't be guided in).
In the end, some is just a matter of taste. I actually had the privilege of living in a famous bit of architecture for a semester, a Gropius-designed dorm at Harvard. I loved it; most students hated the small rooms. Plus, noise propagated dreadfully (our late night card games were often shut down) and it really didn't work well as a co-ed dorm - only one bathroom per floor, and those were definitely not suitable for unisex use. Worse, you had to go through the stairwell to get to another floor -- and the stairwell was keyed. Don't forget your key at night, or you get locked in a fishbowl in your PJs!
Do architectural gems translate to a happier, more productive workforce? Or are you stuck with a museum piece which resists change? I don't have a crystal ball -- though perhaps you can find a conference room which looks like one.
Novartis' Cambridge facility also has a nice atrium, though a bit more staid. Cell Signalling Technologies' lobby on the North Shore resembles a small jungle.
Biotech buildings in Cambridge are a mix. Some renovated older buildings are quite attractive, and some really are pretty plain. New buildings are a mix too. Space is precious, so those atria really shout 'we can afford it!'. Millennium's first custom building (75 Sidney) had a small atrium with a spiral stair (alas, not a double spiral!), but the later buildings used decorative ornamentation (granite in the bathrooms!) and non-rectangular walls in place of unusable air space.
Much as old banks built solid buildings with serious marble & columns to emphasize their solidity & seriousness, so too does a flashy building speak of a company's confidence in its future. Of course, such confidence is all too often misplaced. As a graduate student I watched Hybridon's headquarters emerge from a rehabbed tire warehouse, but then at Millennium I got to see the gorgeous inside -- because Hybridon was subletting the space to us. One company going up, another going down. Later, Millennium started shedding space and discovered that two story atria with a staircase looks nice, but doesn't make subletting the building a floor at a time practical without some changes.
It is also useful to be skeptical of some of the touted benefits of architecture. I am a fan of good architecture, but what looks good doesn't always work well. I love seeing Frank Lloyd Wright houses, but living in one is reputed to require some getting used to. All glass conference room walls may emphasize openess & light, but sometimes you don't really want to be a goldfish. MIT's Stata center is very funky, but just try finding an office in there (and worse, the interior is dead for at least one major cellphone carrier, meaning you can't be guided in).
In the end, some is just a matter of taste. I actually had the privilege of living in a famous bit of architecture for a semester, a Gropius-designed dorm at Harvard. I loved it; most students hated the small rooms. Plus, noise propagated dreadfully (our late night card games were often shut down) and it really didn't work well as a co-ed dorm - only one bathroom per floor, and those were definitely not suitable for unisex use. Worse, you had to go through the stairwell to get to another floor -- and the stairwell was keyed. Don't forget your key at night, or you get locked in a fishbowl in your PJs!
Do architectural gems translate to a happier, more productive workforce? Or are you stuck with a museum piece which resists change? I don't have a crystal ball -- though perhaps you can find a conference room which looks like one.
Where Biotech?
Biotech's big industry trade group, BIO, is convening in Boston this weekend & that means lots of dough to various media and advertising groups. The radio ads claim 20K biotech leaders will be here. One very visible consequence are billboards around town urging biotech companies to relocate to Las Vegas.
Even without the convention, there are regular TV and radio spots with Jeff Daniels urging life science companies to relocate to Michigan. Rhode Island has made specific attempts to schmooze companies to head south (alas for them, their biggest success, Alpha-Beta, moved just prior to clinical trial failure and company going bust).
The Nevada ads tout 'No Taxes', ignoring the fact that biotechs generally don't pay taxes -- because you have to make money to pay taxes, an extreme rarity in biotech. Actually, I'd bet the cost structure for Nevada is probably lower across the board -- cheaper electricity, lower heating costs (but higher cooling -- perhaps a wash?), certainly cheaper housing. Yet biotech is clearly strongly clustered. Are there any biotechs in Nevada?
I'm not trying to knock Nevada, or Michigan, or anywhere else. It's just the secret to getting biotechs to grow is elusive. A lot of the genomics companies started near big genome centers -- but why didn't Oklahoma reap companies from the center there? Big research universities are important -- but many big research universities do not have a garden of biotech in their neighborhood. Why is our local biotech largely in urban areas, whereas in Pennsylvania it seems to be entirely suburban -- even where I grew up (a region named for the 24th letter of the alphabet) has a cluster of biotechs. Why is non-Cambridge biotech around here largely west of town, whereas similar regions to the north and south have little to none: Worcester MA has a number of companies, but similarly distant Providence RI or southern NH very few. Why in the midwest is it easy to name companies headquartered near U Wisconsin, but not U Illinois?
I don't have the answer, and I suspect each region has a different answer. The U Mass Medical Center in Worcester may have pulled companies out that way, whereas Philadelphia area doesn't have a major academic research environment just outside the city.
One thought, and one which won't make happy the politicians trying to seed their own biotech clusters: what you need to get lots of new biotech is to have some old biotech. When companies grow and grow, they slowly shed talented people who often stay in the same region but start new ventures. And when companies crash-and-burn, a lot of people are looking for new opportunities. At the old shop we had large cohorts of persons previously at Biogen or Genetics Institute or Genome Therapeutics, and each time those companies went through convulsions a few more came on. Now, of course, every company in Cambridge is riddled with ex-Millennium hands, and many who learned the ropes of business there have gone on to start small companies. In addition to a bunch of folks I knew in my old life, my new shop has other clusters of former employers.
In the forest, when the elements topple an old tree the opportunity for new trees is created. The old roots may sprout new shoots, more sunlight comes in, and most of all the rotten log returns its resources to the surrounding soil. The analogy, like all analogies, is imperfect, but it's the same in biotech. The marketplace's creative destruction is a powerful force, but in order for it to create it needs something to destroy. States and localities wishing they had more biotech companies should continue their efforts, but temper their expectations, as those that gots gets and those that ain't gots gets slowly.
Even without the convention, there are regular TV and radio spots with Jeff Daniels urging life science companies to relocate to Michigan. Rhode Island has made specific attempts to schmooze companies to head south (alas for them, their biggest success, Alpha-Beta, moved just prior to clinical trial failure and company going bust).
The Nevada ads tout 'No Taxes', ignoring the fact that biotechs generally don't pay taxes -- because you have to make money to pay taxes, an extreme rarity in biotech. Actually, I'd bet the cost structure for Nevada is probably lower across the board -- cheaper electricity, lower heating costs (but higher cooling -- perhaps a wash?), certainly cheaper housing. Yet biotech is clearly strongly clustered. Are there any biotechs in Nevada?
I'm not trying to knock Nevada, or Michigan, or anywhere else. It's just the secret to getting biotechs to grow is elusive. A lot of the genomics companies started near big genome centers -- but why didn't Oklahoma reap companies from the center there? Big research universities are important -- but many big research universities do not have a garden of biotech in their neighborhood. Why is our local biotech largely in urban areas, whereas in Pennsylvania it seems to be entirely suburban -- even where I grew up (a region named for the 24th letter of the alphabet) has a cluster of biotechs. Why is non-Cambridge biotech around here largely west of town, whereas similar regions to the north and south have little to none: Worcester MA has a number of companies, but similarly distant Providence RI or southern NH very few. Why in the midwest is it easy to name companies headquartered near U Wisconsin, but not U Illinois?
I don't have the answer, and I suspect each region has a different answer. The U Mass Medical Center in Worcester may have pulled companies out that way, whereas Philadelphia area doesn't have a major academic research environment just outside the city.
One thought, and one which won't make happy the politicians trying to seed their own biotech clusters: what you need to get lots of new biotech is to have some old biotech. When companies grow and grow, they slowly shed talented people who often stay in the same region but start new ventures. And when companies crash-and-burn, a lot of people are looking for new opportunities. At the old shop we had large cohorts of persons previously at Biogen or Genetics Institute or Genome Therapeutics, and each time those companies went through convulsions a few more came on. Now, of course, every company in Cambridge is riddled with ex-Millennium hands, and many who learned the ropes of business there have gone on to start small companies. In addition to a bunch of folks I knew in my old life, my new shop has other clusters of former employers.
In the forest, when the elements topple an old tree the opportunity for new trees is created. The old roots may sprout new shoots, more sunlight comes in, and most of all the rotten log returns its resources to the surrounding soil. The analogy, like all analogies, is imperfect, but it's the same in biotech. The marketplace's creative destruction is a powerful force, but in order for it to create it needs something to destroy. States and localities wishing they had more biotech companies should continue their efforts, but temper their expectations, as those that gots gets and those that ain't gots gets slowly.
Thursday, April 26, 2007
Gobble Gobble Slurp
AstraZeneca's record-setting $15B+ buy of Medimmune gave the old workplace's stock a mild goose, but things have settled. It is a reminder of what the ultimate fate of virtually any semi-successful biotech company will be.
In the end, there are three possible fates for a biotech: survival, liquidation or acquisition. Liquidation is rare & will probably always happen to early-stage companies, but does happen. One genomics company (Progenitor) reputedly let their employees show up for work to locked doors. Most companies will be acquired down the road; only a few frontrunners will stay independent. There are, of course, variations on these themes. J&J has a track record of acquiring companies but then leaving them largely recognizable. Some companies (e.g. Cadus) disappear in an operational sense but never quite disappear legally -- business zombies. Mergers of equals are theoretically possible and often claimed (Biogen-Idec), but how lopsided the division of spoils is can't really be assessed by an outsider.
Millennium executed a number of acquisitions during my tenure, with many being quite successful -- influential people remain who joined through the Chemgenics or Leukosite acquisition. Leukosite brought in Velcade (then PS-341), from a company (Proscript) which Leukosite hadn't finished digesting (er, assimilating) when the the MLNM-LKST merger was announced. Much of Millennium's inflammation pipeline has strong roots back to Leukosite.
But then there was the big demonstration of 2+2<<4: COR. Millennium bought COR for Integrillin & a sales force, with some interesting early stage oncology and cardiovascular programs in as icing. The corporate cultures seemed compatible and the excitement was there. But somehow things quickly ran downhill & when it became apparent that Millennium was overstretched, the COR (now MLNM San Francisco) site was targeted for liquidation. Eventually, after sinking many dineros into further clinical studies, Millennium essentially walked away from Integrillin. So for $2B plus, a sales force was purchased plus a revenue stream from Integrillin and some other leftovers -- plus some important contributions from the ex-COR folks in wrapping up the Bayer collaboration. Was it worth it? My impression is that everybody on the COR side wished they could get a do-over.
MedImmune was hardly an isolated purchase -- big pharmas and even big biotechs (Amgen, Genentech) have been plucking out various biotechs, generally either for hot therapeutic platforms (siRNAs, advanced antibody technologies or exotic antibody alternatives) or late stage compounds. Looking around the Cambridge neighborhoods finds plenty of companies in the former (Dyax, Alnylam, Archemix) or latter (MLNM, Vertex, Alkermes) categories. The majors still have their gaping pipeline gaps, and Wall Street is starting to hound Genentech towards more acquisitions -- and Amgen is starting to experience the pain of commercial reversals. Odds are there will be more buyouts -- and more flameouts & companies (e.g. Imclone) which flop at the auction bay.
So grab a ringside seat & get comfortable -- but please don't play the ponies. If anyone tells you they know who's going to buy whom for what price, odds are they're lying. Even if they aren't, do you really want to follow in the footsteps of the famed biotech investor who was wisked from her Connecticut home to a federally-paid stay in West Virginia?
In the end, there are three possible fates for a biotech: survival, liquidation or acquisition. Liquidation is rare & will probably always happen to early-stage companies, but does happen. One genomics company (Progenitor) reputedly let their employees show up for work to locked doors. Most companies will be acquired down the road; only a few frontrunners will stay independent. There are, of course, variations on these themes. J&J has a track record of acquiring companies but then leaving them largely recognizable. Some companies (e.g. Cadus) disappear in an operational sense but never quite disappear legally -- business zombies. Mergers of equals are theoretically possible and often claimed (Biogen-Idec), but how lopsided the division of spoils is can't really be assessed by an outsider.
Millennium executed a number of acquisitions during my tenure, with many being quite successful -- influential people remain who joined through the Chemgenics or Leukosite acquisition. Leukosite brought in Velcade (then PS-341), from a company (Proscript) which Leukosite hadn't finished digesting (er, assimilating) when the the MLNM-LKST merger was announced. Much of Millennium's inflammation pipeline has strong roots back to Leukosite.
But then there was the big demonstration of 2+2<<4: COR. Millennium bought COR for Integrillin & a sales force, with some interesting early stage oncology and cardiovascular programs in as icing. The corporate cultures seemed compatible and the excitement was there. But somehow things quickly ran downhill & when it became apparent that Millennium was overstretched, the COR (now MLNM San Francisco) site was targeted for liquidation. Eventually, after sinking many dineros into further clinical studies, Millennium essentially walked away from Integrillin. So for $2B plus, a sales force was purchased plus a revenue stream from Integrillin and some other leftovers -- plus some important contributions from the ex-COR folks in wrapping up the Bayer collaboration. Was it worth it? My impression is that everybody on the COR side wished they could get a do-over.
MedImmune was hardly an isolated purchase -- big pharmas and even big biotechs (Amgen, Genentech) have been plucking out various biotechs, generally either for hot therapeutic platforms (siRNAs, advanced antibody technologies or exotic antibody alternatives) or late stage compounds. Looking around the Cambridge neighborhoods finds plenty of companies in the former (Dyax, Alnylam, Archemix) or latter (MLNM, Vertex, Alkermes) categories. The majors still have their gaping pipeline gaps, and Wall Street is starting to hound Genentech towards more acquisitions -- and Amgen is starting to experience the pain of commercial reversals. Odds are there will be more buyouts -- and more flameouts & companies (e.g. Imclone) which flop at the auction bay.
So grab a ringside seat & get comfortable -- but please don't play the ponies. If anyone tells you they know who's going to buy whom for what price, odds are they're lying. Even if they aren't, do you really want to follow in the footsteps of the famed biotech investor who was wisked from her Connecticut home to a federally-paid stay in West Virginia?
Wednesday, April 11, 2007
The ups-and-downs of out-licensing
Monday's Boston Globe had an interesting article (probably $$$) on a story which hadn't seen much attention previously but illustrated a number of biotech themes: rapid reversals & odd partnerships.
A group at Beth Israel Deaconess Medical Center (BIDMC) had developed a potential new protein therapeutic which they thought they might hit it big with. I must confess a special fondness of BIDMC, as a team there oversaw the delivery of my most important project ever, but they seem to have really gone out on a strange limb in this case by picking an odd partner for developing their blockbuster.
The potential blockbuster is apparently a single chain protein encoding a dimeric erythropoeitin (EPO). EPO is, of course, the most financially successful biotech drug ever and what made Amgen bigger in market cap than some old-line pharmaceutical companies. EPO has been in the crosshairs of a number of other companies, but Amgen has thus far won all the battles on patents -- first with Genetics Institute (now Wyeth) at the outset and later knocking out Transkaryotic's (now Shire) attempt to end-run their patents. Amgen followed up with a slightly modified form (Aranesp), which has also cleaned up. Affymax has a clever mimic in trials -- though this illustrates the need for patience in this business, as their splashy paper on it came out when I was interviewing at Millennium nearly 11 years ago!
So a tandem EPO would seem like a reasonable bet, with the claim that this form is longer lasting (ala Aranesp) and more potent. EPO is used to treat anemia in kidney failure (EPO is normally made in the kidney) and cancer patients (along with illicit off-label uses in the field of athletics) -- more is better, right?
Lately, the bloom is off that rose -- several studies are suggesting that for cancer patients there may be drawbacks to high EPO doses. EPO has now earned a black box warning and Amgen is scrambling (the CFO just bailed -- perhaps with shoeprints on his backside).
Now that's just bad luck -- pharmaceuticals are like that. One day COX2 inhibitors are miracle drugs; the next day they're persona non grata.
It's the other half of the story that I found very curious. If you were trying to out-license your institutions exciting new protein therapeutic, what would your first choice of company be? How about a failing genomics company with a slim bank account? No? That doesn't sound appealing? But that's exactly what BIDMC did.
Now a lot of genomics companies exited the genomics boom in a strange place: lots of money raised during the bubble, but no path forward to make money in genomics. Companies such as HGS and MLNM are still living off that cash, but they had interesting programs going. Others had stranger outcomes. Variagenics and Hyseq proved that 1 genomics company + 1 genomics company = 0 genomics companies, as they merged, ditched all their genomics operations, and changed to Nuvelo to develop an in-licensed protein therapeutic.
BIDMC chose DNA Print Genomics for their wonder drug. I have nothing against DNA Print, but there's nothing in memory (or on their website) to suggest that they have any of the key skills. Nor do they have much cash. While they do actually have products, those products don't inspire much awe. DNA Print will type your DNA to estimate your ancestry. That might be fun, but how big is the market really? They also claim to have tools which can predict the physical characteristics of a person (skin color, earlobe attachment) from forensic samples -- a sort of genetic sketch artist. I'm sure there are missing persons-type cases where this provides one more set of clues, but its hardly something that would see routine use in cases.
Wall Street hardly loves DNA Print -- if Yahoo's statistics are to be believed, it is trading at a market cap of 4.58M much below its cash position of about 8.5M -- but it is also (if I'm reading this right; I really don't stare at these often) blowing through 3-4M per quarter -- meaning that cash will run out in the near future unless they find financing or take a scythe to their operations. This was a point raised in the Globe article -- BIDMC has hitched their wagon to a lame horse which may expire very soon.
An interesting question, which one can never get a straight answer to, is why pick DNAPrint? Was there really nobody else interested? It is curious that the consultant who BIDMC hired to find a licensee (after Eli Lilly had bailed out) for the compound ended up as chief executive at DNAPrint. While that is hardly unheard of, it does raise a real issue of conflicts of interest. The deal structure is strongly loaded towards milestones & royalty payments -- i.e. BIDMC sees very little without a lot of progress being made. DNA Print apparently has reported preclinical results.
A weak & failing partner for a troubled market niche -- hardly a good place to be. C'est la biotechnologie!
A group at Beth Israel Deaconess Medical Center (BIDMC) had developed a potential new protein therapeutic which they thought they might hit it big with. I must confess a special fondness of BIDMC, as a team there oversaw the delivery of my most important project ever, but they seem to have really gone out on a strange limb in this case by picking an odd partner for developing their blockbuster.
The potential blockbuster is apparently a single chain protein encoding a dimeric erythropoeitin (EPO). EPO is, of course, the most financially successful biotech drug ever and what made Amgen bigger in market cap than some old-line pharmaceutical companies. EPO has been in the crosshairs of a number of other companies, but Amgen has thus far won all the battles on patents -- first with Genetics Institute (now Wyeth) at the outset and later knocking out Transkaryotic's (now Shire) attempt to end-run their patents. Amgen followed up with a slightly modified form (Aranesp), which has also cleaned up. Affymax has a clever mimic in trials -- though this illustrates the need for patience in this business, as their splashy paper on it came out when I was interviewing at Millennium nearly 11 years ago!
So a tandem EPO would seem like a reasonable bet, with the claim that this form is longer lasting (ala Aranesp) and more potent. EPO is used to treat anemia in kidney failure (EPO is normally made in the kidney) and cancer patients (along with illicit off-label uses in the field of athletics) -- more is better, right?
Lately, the bloom is off that rose -- several studies are suggesting that for cancer patients there may be drawbacks to high EPO doses. EPO has now earned a black box warning and Amgen is scrambling (the CFO just bailed -- perhaps with shoeprints on his backside).
Now that's just bad luck -- pharmaceuticals are like that. One day COX2 inhibitors are miracle drugs; the next day they're persona non grata.
It's the other half of the story that I found very curious. If you were trying to out-license your institutions exciting new protein therapeutic, what would your first choice of company be? How about a failing genomics company with a slim bank account? No? That doesn't sound appealing? But that's exactly what BIDMC did.
Now a lot of genomics companies exited the genomics boom in a strange place: lots of money raised during the bubble, but no path forward to make money in genomics. Companies such as HGS and MLNM are still living off that cash, but they had interesting programs going. Others had stranger outcomes. Variagenics and Hyseq proved that 1 genomics company + 1 genomics company = 0 genomics companies, as they merged, ditched all their genomics operations, and changed to Nuvelo to develop an in-licensed protein therapeutic.
BIDMC chose DNA Print Genomics for their wonder drug. I have nothing against DNA Print, but there's nothing in memory (or on their website) to suggest that they have any of the key skills. Nor do they have much cash. While they do actually have products, those products don't inspire much awe. DNA Print will type your DNA to estimate your ancestry. That might be fun, but how big is the market really? They also claim to have tools which can predict the physical characteristics of a person (skin color, earlobe attachment) from forensic samples -- a sort of genetic sketch artist. I'm sure there are missing persons-type cases where this provides one more set of clues, but its hardly something that would see routine use in cases.
Wall Street hardly loves DNA Print -- if Yahoo's statistics are to be believed, it is trading at a market cap of 4.58M much below its cash position of about 8.5M -- but it is also (if I'm reading this right; I really don't stare at these often) blowing through 3-4M per quarter -- meaning that cash will run out in the near future unless they find financing or take a scythe to their operations. This was a point raised in the Globe article -- BIDMC has hitched their wagon to a lame horse which may expire very soon.
An interesting question, which one can never get a straight answer to, is why pick DNAPrint? Was there really nobody else interested? It is curious that the consultant who BIDMC hired to find a licensee (after Eli Lilly had bailed out) for the compound ended up as chief executive at DNAPrint. While that is hardly unheard of, it does raise a real issue of conflicts of interest. The deal structure is strongly loaded towards milestones & royalty payments -- i.e. BIDMC sees very little without a lot of progress being made. DNA Print apparently has reported preclinical results.
A weak & failing partner for a troubled market niche -- hardly a good place to be. C'est la biotechnologie!
Thursday, March 29, 2007
454? How Roche!
Today's GenomeWeb bears the news that Roche Diagnostics is buying out 454 Life Sciences. Since Roche was previously the sole distributor of 454's sequencers and Curagen had announced their desire to sell the subsidiary, this is hardly a shocking development. But it is the third next generation sequencing company to be bought by an established player -- ABI slurped up Agencourt Personal Genomics and Illumina recently bought Solexa. So far, Affymetrix and Agilent have stayed out -- as has Nimblegen. There are plenty of other startup next generation sequencing shops out there, and certainly other candidates for acquirers. Roche, of course, got the clear current front runner, though it may be that the next wave of sequencer launches will close the gap quickly.
Whether these acquisitions are good for next generation sequencer development is an open question. On the one hand, these larger organizations bring deep pockets and substantial marketing expertise. But, there are plenty of pitfalls. For both ABI and Illumina, the new machines compete with their old machines -- smart companies see this as inevitable, but many companies completely botch the job due to internal conflicts (as amply documented by Clayton Christiansen in his books). It isn't encouraging that the Agencourt Personal Genomics technology is impossible to find on the ABI website.
It will also be interesting to see how long the 454 moniker lasts -- one hates to see pioneers go, but on the other hand I find naming a subsidiary after the accounting code tres gauche.
An interesting note in the GW item is that Roche was previously prohibited from marketing regulated diagnostics built on the 454 platform. Roche has previously tried to launch some molecular diagnostics -- the D word is after all in their name -- so this is a clear fit. On the other hand, a run on the 454 is reputed to be serious money, so they'll need to either find a very high value application (in a field notorious for antiquated, miserly reimbursement rules) or figure out a way to run lots of tests simultaneously. Given the rather long read lengths of the 454, one approach to the latter would be to use sequence tags near the beginning of the read to identify the original samples.
Another GW item describes some roundtable discussion at a recent meeting on next generation sequencing. The price for a genome in 2010 is still a big question, but a lot of bets are apparently in the $10K-$25K range. Some of the leaders in the field are taking a realistic view of the utility of such sequencers at such a price tag -- if you can scan the most informative SNPs for $1K, then why sequence? I'm guessing that other than a few pioneers (J.Craig is apparently resequencing his genome), there won't be a lot at those prices. On the other hand, cancer genomics is a natural fit, as each genome is different (indeed, each sample probably has many distinguishable genomes) and understanding all the fine molecular details will be valuable. SNP chips can estimate copy numbers, but not tell you how those pieces are stitched together nor find all the interesting mutations.
Even with the price at $1K, sequencing will certainly not be 'too cheap to meter'. Notions of sequencing a big chunk of the human population have appeal, but do we really want to blow another few billion dollars on human sequencing? On the other hand, as I've suggested before, other mammalian genomes may provide a lot of interesting biology for the buck (or bark). What are the most interesting unbagged genomes out there -- that sounds like the topic for another day's post...
Whether these acquisitions are good for next generation sequencer development is an open question. On the one hand, these larger organizations bring deep pockets and substantial marketing expertise. But, there are plenty of pitfalls. For both ABI and Illumina, the new machines compete with their old machines -- smart companies see this as inevitable, but many companies completely botch the job due to internal conflicts (as amply documented by Clayton Christiansen in his books). It isn't encouraging that the Agencourt Personal Genomics technology is impossible to find on the ABI website.
It will also be interesting to see how long the 454 moniker lasts -- one hates to see pioneers go, but on the other hand I find naming a subsidiary after the accounting code tres gauche.
An interesting note in the GW item is that Roche was previously prohibited from marketing regulated diagnostics built on the 454 platform. Roche has previously tried to launch some molecular diagnostics -- the D word is after all in their name -- so this is a clear fit. On the other hand, a run on the 454 is reputed to be serious money, so they'll need to either find a very high value application (in a field notorious for antiquated, miserly reimbursement rules) or figure out a way to run lots of tests simultaneously. Given the rather long read lengths of the 454, one approach to the latter would be to use sequence tags near the beginning of the read to identify the original samples.
Another GW item describes some roundtable discussion at a recent meeting on next generation sequencing. The price for a genome in 2010 is still a big question, but a lot of bets are apparently in the $10K-$25K range. Some of the leaders in the field are taking a realistic view of the utility of such sequencers at such a price tag -- if you can scan the most informative SNPs for $1K, then why sequence? I'm guessing that other than a few pioneers (J.Craig is apparently resequencing his genome), there won't be a lot at those prices. On the other hand, cancer genomics is a natural fit, as each genome is different (indeed, each sample probably has many distinguishable genomes) and understanding all the fine molecular details will be valuable. SNP chips can estimate copy numbers, but not tell you how those pieces are stitched together nor find all the interesting mutations.
Even with the price at $1K, sequencing will certainly not be 'too cheap to meter'. Notions of sequencing a big chunk of the human population have appeal, but do we really want to blow another few billion dollars on human sequencing? On the other hand, as I've suggested before, other mammalian genomes may provide a lot of interesting biology for the buck (or bark). What are the most interesting unbagged genomes out there -- that sounds like the topic for another day's post...
Monday, March 19, 2007
Personalized Medicine: The long slog
Personalized medicine is a wonderful concept: instead of lumping huge groups of patients with similar symptoms together to be treated with a standard regimen, therapy would be tailored to each patient based on the specifics of their disease. This fine-grained diagnosis would be dtermined using the fruits of the human genome project.
In some sense this is simply an attempt to accerate the long-term trend in medicine of subdividing diseases. From four humors we have moved to a myriad of diseases. In a more specific sense, consider leukemia. In the 1940's, when my paternal grandmother succumbed to this disease, there were (as far as I can tell) less than a half dozen recognized leukemia subtypes; these days there are certainly over one hundred. This is not idle splitting; each disease has its own diagnostic hallmarks, treatment strategies, and outcome expectations. Great (but not universal) success has been achieved with childhood leukemias, whereas some other leukemias are still very grim sentences.
To realize the dream of personalized medicine is going to require a lot of hard work, both in the lab and in the clinic. I'm going to go into some detail on one such endeavor, one which I am very familiar with because I was peripherally involved with it. Now, in the interest of full disclosure, it must be stated that I still retain a small financial interest in my former employer, Millennium Pharmaceuticals, and that several of the authors are good friends. However, it should also be pointed out that while Millennium once trumpeted every baby step towards personalized medicine, the electronic publication of this story engendered no press release. If the company thinks it can't perk up its share price with the story, there is faint reason to think I can.
Multiple myeloma is a malignancy of the antibody secreting cells, the plasma B cells. Two famous victims are the columnist Ann Landers and actor Peter Boyle; a well-known long-term survivor is former vice presidential candidate Geraldine Ferraro. Cancers are often loosely broken into two categories: "liquid" tumors such as leukemias and solid tumors. Myelomas occupy the mushy middle: while they are derangements of the immune system like leukemias, myelomas can form distinct tumors (plasmacytomas) in the body. A hallmark of the disease is bone destruction around the tumors; patients' X-rays can have a 'swiss-cheese' appearance.
Myelomas are a devastating disease, but also occupy an important place in biotech history. Because myelomas sprout from a single deranged antibody-secreting cell, the blood (and ultimately urine) of patients becomes full of a single antibody, the M-protein (also known historically as a Bence-Jones protein). A flash of inspiration led Koehler & Milstein to realize that if they could have that antibody be one of their choosing, then a limitless source of a specific antibody could be at hand. The monoclonal antibody technology which they invented led to a host of useful reagents and tools, including home pregnancy kits. The last decade has finally seen monoclonal antibodies become important therapeutic options, particularly in cancer, and a number are being tried on myeloma: a complete circle.
The drug of interest here is not an antibody but rather a small molecule: bortezomib, tradename Velcade and known in the older literature as MLN341, LDP341 or PS341. Bortezomib works like no other drug on the market: it blocks the action of a large complex called the proteasome. A key normal function of the proteasome is to serve as the cells main protein disposal system, chewing old or broken proteins back into amino acids. Destruction of proteins by the proteasome can also be a regulated process and appears to be a component of many genetic processes.
Bortezomib has been tried as a therapeutic agent, either alone or in concert with other drugs, against a wide array of tumors. It has disappointed often, still tantalizes in some areas, and has received FDA approval for two malignancies: multiple myeloma and another B-cell malignancy called mantle cell lymphoma.
Early in the clinical trial process Millennium decided to build a personalized medicine component into the main Velcade trials in multiple myleoma. The justification for this was a mix of different ideas: including a desire to show results in personalized medicine, a potential to use the personalized medicine element to support FDA approval should trial results be equivocal, an opportunity to understand why myelomas are sensitive to proteasome inhibition.
The design was both simple and audacious: in each trial patients would be asked to supply a bone marrow biopsy for analysis by RNA profiling, which can examine the levels of each gene's mRNA. It sounds simple; in practice this would use a cutting edge technology (RNA profiling) notorious for sensitivity to sample processing. It would also be the first use of such technology in a prospective clinical trial; prior publications had either used archived samples or new samples from available patient populations. Protocols would have to be devised, staff trained at each clinical center in a multi-center trial.
The results can now be seen in Blood as Mulligan et al. You will need paid access to the journal to read the details, which most large academic libraries should have. Also, the sponsors of Blood (American Society of Hematologists) have some mechanism for patient access -- and eventually (I think it is 6 months) they make everything free. The data supplement and methods supplement are free.
Table 1 gives you some hint why few companies will be eager to invest in this kind of study again, as it details how many samples actually made it to the analysis. One can envision the path from trial to data ready to analyze as a pipeline of many steps, each of which is leaky. Patients must consent, the myleoma fraction purified, RNA captured, arrays analyzed and finally useful survival data obtained. Patient consent refusals (or later paperwork deficiencies), poor samples, patients lost to follow-up, etc. eat into the starting material. Even good clinical luck can be problematic: one of the key bortezomib trials was halted early because the drug was clearly working better than the control drug. This was great news for patients, who needed (and still need) more treatment options, and great news for the company, which could more quickly obtain approval to sell the drug. But it both deprived the personalized medicine study of anticipated patients and muddied the waters on many others. For example, samples had been obtained from control arm patients, but now many of these patients were crossing over to bortezomib and were no longer useful controls.
How leaky was the pipeline? Four clinical studies had RNA profiling components (another complication; each study was on a different trial population, with different disease characteristics). Looking at evaluable survival (meaning the patient stayed in the study long enough to figure out if the drug helped them live longer or not): 13%, 22%, 23% and 22% of patients from the 4 trials (024, 025, 039 & 040 respectively) had data for evaluation.
On the other end, many studies were accumulating information that myleoma has many genetic subtypes: perhaps at least seven or so major ones, and many of these can be further subdivided. For example, one major translocation driving myleoma involves a gene called MMSET. In a subset of these patients, a second gene (FGFR3) is also activated by the translocation. Many other classical clinical measures are used by clinicians, such as albumin and CRP levels. A very interesting question would be whether bortezomib had greater or lesser activity in any of the subtypes (or sub-subtypes); but with the ferocious sample attrition, the sample numbers just aren't great enough to be able to draw conclusions. This also illustrates the power & problem of RNA microarrays: you can look at tens of thousands of genes, allowing you to find patterns with few preconceived biases. But, you are looking at tens of thousands of genes, so the multiple testing problem is very acute.
The other thing most frustrating about this study, as in a large number of RNA profiling studies, is that there is no Eureka! moment coming from the data. Gene sets were successfully identified which can predict response or survival, but what do they mean? The hope that RNA profiling would provide the Cliff's Notes to a tumor is a hope rarely realized; instead the tumor reveals a nearly inscrutable scrawl. The study succeeded scientifically, but commercially it was not a contributor.
This will probably be more the norm than the exception in the quest for personalized medicine. Huge investments will need to be made in large clinical studies, many of which won't bear fruit, at least immediately. Combined with other myleoma studies, the Mulligan et al study will enhance our knowledge of myleoma. The execution of the study provides a roadmap for other such studies. New technologies are available which weren't when these studies began. In particular, for cancer one might opt for DNA profiling to map the underlying genetic makeup of the tumor (greatly hashed), rather than RNA. While RNA is where the action really is, DNA is much more stable and therefore may lead to results more consistent between clinical sites. And once in a while, a study might just have results that have oncologists running through the streets, making the whole exercise worthwhile.
In some sense this is simply an attempt to accerate the long-term trend in medicine of subdividing diseases. From four humors we have moved to a myriad of diseases. In a more specific sense, consider leukemia. In the 1940's, when my paternal grandmother succumbed to this disease, there were (as far as I can tell) less than a half dozen recognized leukemia subtypes; these days there are certainly over one hundred. This is not idle splitting; each disease has its own diagnostic hallmarks, treatment strategies, and outcome expectations. Great (but not universal) success has been achieved with childhood leukemias, whereas some other leukemias are still very grim sentences.
To realize the dream of personalized medicine is going to require a lot of hard work, both in the lab and in the clinic. I'm going to go into some detail on one such endeavor, one which I am very familiar with because I was peripherally involved with it. Now, in the interest of full disclosure, it must be stated that I still retain a small financial interest in my former employer, Millennium Pharmaceuticals, and that several of the authors are good friends. However, it should also be pointed out that while Millennium once trumpeted every baby step towards personalized medicine, the electronic publication of this story engendered no press release. If the company thinks it can't perk up its share price with the story, there is faint reason to think I can.
Multiple myeloma is a malignancy of the antibody secreting cells, the plasma B cells. Two famous victims are the columnist Ann Landers and actor Peter Boyle; a well-known long-term survivor is former vice presidential candidate Geraldine Ferraro. Cancers are often loosely broken into two categories: "liquid" tumors such as leukemias and solid tumors. Myelomas occupy the mushy middle: while they are derangements of the immune system like leukemias, myelomas can form distinct tumors (plasmacytomas) in the body. A hallmark of the disease is bone destruction around the tumors; patients' X-rays can have a 'swiss-cheese' appearance.
Myelomas are a devastating disease, but also occupy an important place in biotech history. Because myelomas sprout from a single deranged antibody-secreting cell, the blood (and ultimately urine) of patients becomes full of a single antibody, the M-protein (also known historically as a Bence-Jones protein). A flash of inspiration led Koehler & Milstein to realize that if they could have that antibody be one of their choosing, then a limitless source of a specific antibody could be at hand. The monoclonal antibody technology which they invented led to a host of useful reagents and tools, including home pregnancy kits. The last decade has finally seen monoclonal antibodies become important therapeutic options, particularly in cancer, and a number are being tried on myeloma: a complete circle.
The drug of interest here is not an antibody but rather a small molecule: bortezomib, tradename Velcade and known in the older literature as MLN341, LDP341 or PS341. Bortezomib works like no other drug on the market: it blocks the action of a large complex called the proteasome. A key normal function of the proteasome is to serve as the cells main protein disposal system, chewing old or broken proteins back into amino acids. Destruction of proteins by the proteasome can also be a regulated process and appears to be a component of many genetic processes.
Bortezomib has been tried as a therapeutic agent, either alone or in concert with other drugs, against a wide array of tumors. It has disappointed often, still tantalizes in some areas, and has received FDA approval for two malignancies: multiple myeloma and another B-cell malignancy called mantle cell lymphoma.
Early in the clinical trial process Millennium decided to build a personalized medicine component into the main Velcade trials in multiple myleoma. The justification for this was a mix of different ideas: including a desire to show results in personalized medicine, a potential to use the personalized medicine element to support FDA approval should trial results be equivocal, an opportunity to understand why myelomas are sensitive to proteasome inhibition.
The design was both simple and audacious: in each trial patients would be asked to supply a bone marrow biopsy for analysis by RNA profiling, which can examine the levels of each gene's mRNA. It sounds simple; in practice this would use a cutting edge technology (RNA profiling) notorious for sensitivity to sample processing. It would also be the first use of such technology in a prospective clinical trial; prior publications had either used archived samples or new samples from available patient populations. Protocols would have to be devised, staff trained at each clinical center in a multi-center trial.
The results can now be seen in Blood as Mulligan et al. You will need paid access to the journal to read the details, which most large academic libraries should have. Also, the sponsors of Blood (American Society of Hematologists) have some mechanism for patient access -- and eventually (I think it is 6 months) they make everything free. The data supplement and methods supplement are free.
Table 1 gives you some hint why few companies will be eager to invest in this kind of study again, as it details how many samples actually made it to the analysis. One can envision the path from trial to data ready to analyze as a pipeline of many steps, each of which is leaky. Patients must consent, the myleoma fraction purified, RNA captured, arrays analyzed and finally useful survival data obtained. Patient consent refusals (or later paperwork deficiencies), poor samples, patients lost to follow-up, etc. eat into the starting material. Even good clinical luck can be problematic: one of the key bortezomib trials was halted early because the drug was clearly working better than the control drug. This was great news for patients, who needed (and still need) more treatment options, and great news for the company, which could more quickly obtain approval to sell the drug. But it both deprived the personalized medicine study of anticipated patients and muddied the waters on many others. For example, samples had been obtained from control arm patients, but now many of these patients were crossing over to bortezomib and were no longer useful controls.
How leaky was the pipeline? Four clinical studies had RNA profiling components (another complication; each study was on a different trial population, with different disease characteristics). Looking at evaluable survival (meaning the patient stayed in the study long enough to figure out if the drug helped them live longer or not): 13%, 22%, 23% and 22% of patients from the 4 trials (024, 025, 039 & 040 respectively) had data for evaluation.
On the other end, many studies were accumulating information that myleoma has many genetic subtypes: perhaps at least seven or so major ones, and many of these can be further subdivided. For example, one major translocation driving myleoma involves a gene called MMSET. In a subset of these patients, a second gene (FGFR3) is also activated by the translocation. Many other classical clinical measures are used by clinicians, such as albumin and CRP levels. A very interesting question would be whether bortezomib had greater or lesser activity in any of the subtypes (or sub-subtypes); but with the ferocious sample attrition, the sample numbers just aren't great enough to be able to draw conclusions. This also illustrates the power & problem of RNA microarrays: you can look at tens of thousands of genes, allowing you to find patterns with few preconceived biases. But, you are looking at tens of thousands of genes, so the multiple testing problem is very acute.
The other thing most frustrating about this study, as in a large number of RNA profiling studies, is that there is no Eureka! moment coming from the data. Gene sets were successfully identified which can predict response or survival, but what do they mean? The hope that RNA profiling would provide the Cliff's Notes to a tumor is a hope rarely realized; instead the tumor reveals a nearly inscrutable scrawl. The study succeeded scientifically, but commercially it was not a contributor.
This will probably be more the norm than the exception in the quest for personalized medicine. Huge investments will need to be made in large clinical studies, many of which won't bear fruit, at least immediately. Combined with other myleoma studies, the Mulligan et al study will enhance our knowledge of myleoma. The execution of the study provides a roadmap for other such studies. New technologies are available which weren't when these studies began. In particular, for cancer one might opt for DNA profiling to map the underlying genetic makeup of the tumor (greatly hashed), rather than RNA. While RNA is where the action really is, DNA is much more stable and therefore may lead to results more consistent between clinical sites. And once in a while, a study might just have results that have oncologists running through the streets, making the whole exercise worthwhile.
Wednesday, March 07, 2007
Eight Ligands A Leaping
There are few things you can appreciate better than something you have striven hard at yet failed. For a bit of time I was a minor expert in G-protein coupled receptors (GPCRs) -- well, really just the curator of a private database.
GPCRs are molecular wonders. The human genome contains around a thousand of so, but a large fraction of these are olfactory receptors -- our detectors of scents. These are organized into at least three major sequence families -- there were always a few more trying to break in, and I've lost track of the current opinion on these unusual families.
GPCRs have two key characteristics. First, they signal by coupling to heterotrimeric GTP-binding proteins, or G-proteins. Second, they have seven membrane spanning domains. Indeed, the main reason to claim some new looks-like-nothing-else protein as a GPCR was the prediction of this seven transmembrane, or 7TM, character. That 7TM character also makes them crystallographic sinkholes -- I think it is still true that only one crystal structure has been reported (bovine rhodopsin).
GPCRs have an amazing variety of ligands, ranging from small proteins to peptides to sugars to lipids to nucleotides to what have you. As mentioned above, our sense of smell is largely driven by GPCRs -- the discovery of this large subfamily led to a Nobel prize. All sorts of molecules have smells, suggesting the versatility of these proteins. Some fundamental tastes are also detected by GPCRs. Our very entry into this world is governed by a GPCR (oxytocin receptor). Perhaps the most amazing GPCRs are those that detect light and enable our vision. While a photon isn't truly the ligand for these receptors (a photoisomerization product of a covalently bound small molecule is), it is fun to think of it that way. If someday a physiological role is found for a noble gas, I wouldn't want to bet against a GPCR being the receptor for it.
GPCRs are also key drug targets. Many neurotransmitters are detected by GPCRs, along with many important hormones. Because they are such important drug targets, special care was made by every genomics company in sifting through their data to ensure that no GPCR slipped through unnoticed. Many that were found resembled olfactory receptors and probably are -- though sometimes they are clearly expressed in rather peculiar places outside the nose.
Once found, life is not easy. In order to configure a high-throughput screen for a small molecule (a few GPCRs are antibody targets, namely the chemokine receptors), you really need to know what the input is and which G-protein the output is sent out on. This also doesn't hurt in deducing the physiological role for the GPCR. The G-protein is the easy side. The specificity is mostly in the alpha subunit, which there are around 20 of but which also fall into a few subfamilies. Most GPCRs talk to only one of these subfamilies, and better yet for drug discovery there are mutants which seem to be rather promiscuous. So that's taken care of.
But finding a ligand: good luck! Again, since GPCRs seem to bind anything you can assume a novel one might bind just about anything. Treeing them with their kinfolk can suggest possible ligand classes, as neighborhoods on the tree will often have similar ligands, but that's no help if your novel GPCR doesn't look much like the rest. So every lab would throw a small kitchen sink of candidate ligands at their 'orphan' GPCRs and look for a signal -- and based on our experience & what's in the literature, that wasn't very often. New ligands would appear, often in small cascades -- once a new class of ligand was identified (such as short chain fatty acids), then a slew of papers would follow after a bunch of these had been explored on orphan receptors. But the last time I checked my database of receptors of interest without ligands, the list was still long.
One interesting possibility is that some of these receptors don't have specific ligands, because they may not function on their own Heterodimerization of GPCRs has been reported, and other families of receptors (kinases, nuclear hormone receptors) show how proteins lacking in some key receptor functions can still be very important via heterodimerizing with close relatives.
So it is with a bit of envy I view the recent press release from Compugen, an Israeli company that built an informatics approach to identifying novel transcripts and splice variants. They report finding, and demonstrating the function of, eight novel peptide ligands for GPCRs, some for orphan GPCRs and others as additional ligands for previously characterized ones. These are a challenging problem -- one which I and several more clever people at MLNM beat their head on -- and clearly Compugen has done well. Part of their identification relied on finding characteristic amino acid motifs recognized by the proteases which process these peptides -- many peptide GPCR ligands are clipped from larger precursors. Often, multiple ligands are encoded by the same precursor. Finding novel precursors is not trivial -- not only are they very short open reading frames, and therefore are difficult to distinguish from random open reading frames appearing in DNA, but many are also on fast evolutionary clocks -- which means that finding these peptides by cross-searching the human and mouse (for example) genomes isn't always much help.
So hats off to Compugen. I would be shocked if we are done finding GPCR ligands, but to find eight at once is quite an achievement.
GPCRs are molecular wonders. The human genome contains around a thousand of so, but a large fraction of these are olfactory receptors -- our detectors of scents. These are organized into at least three major sequence families -- there were always a few more trying to break in, and I've lost track of the current opinion on these unusual families.
GPCRs have two key characteristics. First, they signal by coupling to heterotrimeric GTP-binding proteins, or G-proteins. Second, they have seven membrane spanning domains. Indeed, the main reason to claim some new looks-like-nothing-else protein as a GPCR was the prediction of this seven transmembrane, or 7TM, character. That 7TM character also makes them crystallographic sinkholes -- I think it is still true that only one crystal structure has been reported (bovine rhodopsin).
GPCRs have an amazing variety of ligands, ranging from small proteins to peptides to sugars to lipids to nucleotides to what have you. As mentioned above, our sense of smell is largely driven by GPCRs -- the discovery of this large subfamily led to a Nobel prize. All sorts of molecules have smells, suggesting the versatility of these proteins. Some fundamental tastes are also detected by GPCRs. Our very entry into this world is governed by a GPCR (oxytocin receptor). Perhaps the most amazing GPCRs are those that detect light and enable our vision. While a photon isn't truly the ligand for these receptors (a photoisomerization product of a covalently bound small molecule is), it is fun to think of it that way. If someday a physiological role is found for a noble gas, I wouldn't want to bet against a GPCR being the receptor for it.
GPCRs are also key drug targets. Many neurotransmitters are detected by GPCRs, along with many important hormones. Because they are such important drug targets, special care was made by every genomics company in sifting through their data to ensure that no GPCR slipped through unnoticed. Many that were found resembled olfactory receptors and probably are -- though sometimes they are clearly expressed in rather peculiar places outside the nose.
Once found, life is not easy. In order to configure a high-throughput screen for a small molecule (a few GPCRs are antibody targets, namely the chemokine receptors), you really need to know what the input is and which G-protein the output is sent out on. This also doesn't hurt in deducing the physiological role for the GPCR. The G-protein is the easy side. The specificity is mostly in the alpha subunit, which there are around 20 of but which also fall into a few subfamilies. Most GPCRs talk to only one of these subfamilies, and better yet for drug discovery there are mutants which seem to be rather promiscuous. So that's taken care of.
But finding a ligand: good luck! Again, since GPCRs seem to bind anything you can assume a novel one might bind just about anything. Treeing them with their kinfolk can suggest possible ligand classes, as neighborhoods on the tree will often have similar ligands, but that's no help if your novel GPCR doesn't look much like the rest. So every lab would throw a small kitchen sink of candidate ligands at their 'orphan' GPCRs and look for a signal -- and based on our experience & what's in the literature, that wasn't very often. New ligands would appear, often in small cascades -- once a new class of ligand was identified (such as short chain fatty acids), then a slew of papers would follow after a bunch of these had been explored on orphan receptors. But the last time I checked my database of receptors of interest without ligands, the list was still long.
One interesting possibility is that some of these receptors don't have specific ligands, because they may not function on their own Heterodimerization of GPCRs has been reported, and other families of receptors (kinases, nuclear hormone receptors) show how proteins lacking in some key receptor functions can still be very important via heterodimerizing with close relatives.
So it is with a bit of envy I view the recent press release from Compugen, an Israeli company that built an informatics approach to identifying novel transcripts and splice variants. They report finding, and demonstrating the function of, eight novel peptide ligands for GPCRs, some for orphan GPCRs and others as additional ligands for previously characterized ones. These are a challenging problem -- one which I and several more clever people at MLNM beat their head on -- and clearly Compugen has done well. Part of their identification relied on finding characteristic amino acid motifs recognized by the proteases which process these peptides -- many peptide GPCR ligands are clipped from larger precursors. Often, multiple ligands are encoded by the same precursor. Finding novel precursors is not trivial -- not only are they very short open reading frames, and therefore are difficult to distinguish from random open reading frames appearing in DNA, but many are also on fast evolutionary clocks -- which means that finding these peptides by cross-searching the human and mouse (for example) genomes isn't always much help.
So hats off to Compugen. I would be shocked if we are done finding GPCR ligands, but to find eight at once is quite an achievement.
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