Thursday, January 10, 2008

Biotech’s Original Sin

If you’re of a particular religious bent, you believe we’re born into the world stained with original sin, which we struggle to overcome in order to find grace.

To trivialize thousands of years of theological debate into a self-serving metaphor: biotech, too, is tainted with its own version of original sin that it must overcome. In this case, we're stuck with the sin of hype. And we pray for the grace of business sustainability.

It is part of the fun of the annual JP Morgan health-care extravaganza to identify in company meetings the stain and then see why it’s essential. Sirtris, that hottest-of-discovery companies, is a more interesting than average example of this essential biotech trait.

Sirtris has never been shy of elaborate media coverage (including our own). And like everyone else, it dances close to the edge of credibility. In a press release previewing its JP Morgan presentation on its lead anti-diabetes candidate, the company’s head of development described its sirtuin targets as “the genes that control the aging process". Not “genes that help control” aging. But the genes.

OK, admits Christoph Westphal, the company’s CEO and a co-founder of Alnylam and Momenta, it would probably have been wiser to qualify the claim. On the other hand, he says, a phalanx of scientific papers says that activating SIRT1 (the first of the sirtuins Sirtris is targeting) does extend life – a lot -- in yeast, worms, fruit flies and mice.

But the overly loose language creates a larger penumbra of scientific interest around Sirtris’s most advanced compound, SRT501, a formulation of resveratrol. New data from a one-month, 98-patient study, showed the drug “trended” to lower fasting glucose levels and, more definitively, significantly improved results on the oral glucose tolerance test.

That’s pretty good for a Phase Ib study. And Sirtris should report out a more probative Phase II trial sometime in the second half of 2008.

But that drug needs more than its clinical data if it's to generate the kind of publicity and momentum that can lead to a blockbuster deal and its life-supporting non-dilutive cash. SRT501, however good its data is, won’t likely win a huge partnership: it’s got no composition of matter patent.

The follow-ons do, says Westphal, and they’re 1000x more potent than resveratrol. But they’re further behind. The first of these NCEs is likely to begin a Phase I trial in a few months but—as with all more potent molecules—brings with it higher risks of unforeseeable toxicities, which is why early-stage molecules for primary-care diseases – particularly those on brand new targets -- don’t generally see high-value deals.

Sirtris needs to keep the interest--okay, the hype--going until its NCEs can stand on their own feet. It has to validate its target with a molecule that won’t drive all that much licensing value so that the follow-ons will. And that’s one reason why Sirtris tells people not to expect a deal within the next 18 months or so – by then, it should have more clinical data on the target itself and, with luck, proof-of-concept data on its NCE.

Granted the company can do all that, the partnering road will be lucrative. There’s huge interest in diabetes among Big Pharmas hit by withdrawals (cf. Avandia) or left out in the cold by Januvia’s success and the difficulty of differentiating their own new DPP4’s (which are marginally efficacious in any event).

Getting there, however, is expensive. Which gets to another Sirtris innovation: it employs just 50 people but created its NCEs with the essential and inexpensive help of 40 full-time chemistry contractors in China. That’s why the company’s progress so far has kept its annual burn rate at a relatively moderate $25 million. (We're a big proponent of limiting uneccessary infrastructure, but even we don’t know of any biotechs who’ve been able to generate that kind of cost-effective discovery productivity through off-shoring. If you have other names, please send them our way.)

But the burn will now get hotter as clinical costs mount. Sirtris will need all its $130 million in cash and more. It wouldn’t have the money it has now if it didn’t have its publicity – and it probably wouldn’t have that publicity if it didn’t dance pretty close to the edge of hype.

That’s biotech’s original sin. Where there’s biotech, there’s hype. And without it, there’s no biotech.

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