The Road to Predictable Innovation: Genomics in Drug R&D

12/10/12Follow @CelticVC

There is a great need by large biotechs and pharma companies to show true and more predictable innovation. In an industry report issued just last week by Deloitte and Thomson Reuters, analysis of the top 12 pharmaceutical companies globally shows that the risk in new drug discovery have grown worse. The report notes an increasing number of failures of late-stage drugs: 22 failed late-stage drug candidates in the past 12 months which wiped out $77 billion of potential value, compared to 19 drug candidates and $73 billion in the previous year.

The growing failure rates in drug development are confounding, as the cost of developing a new drug continues to be a staggering $1.1 billion. What are steps that can turn the tide to make drug development more productive and effective?

One new approach is evident in today’s acquisition by Amgen of deCODE Genetics for just over $400 million in cash.

Amgen acquired deCODE for more than its patents, genetic testing business, or drug development projects—although there is plenty of value there. Amgen bought deCODE for its powerhouse research engine—including its talented genomics scientists, tools, and data.

Robert Bradway, president and CEO at Amgen, describes the rationale for the acquisition by stating that deCODE’s “capability will enhance our efforts to identify and validate human disease targets. This fits perfectly with our mission to pursue rapid development of relevant molecules that reach the right disease targets while avoiding investments in programs based on less well-validated targets.”

Since deCODE’s founding as a genomics pioneer in 1996, the company’s CEO, Kari Stefansson, and his team have been steadfast in pursuing the true opportunity to analyze and understand the link between the genome and disease.

 

Since those early days, deCODE researchers have published over 400 major studies in peer reviewed journals. These studies have then been cited in thousands of other research manuscripts—a true sign of the importance of any work. According to research provided by Thompson Reuters, Kari Stefansson is now among the most-cited authors in the Molecular Biology & Genetics field over the past decade. In just 2012 alone, deCODE published three seminal manuscripts that have received global attention. The first linked the age of the father to the incidence of diseases such as autism and schizophrenia. The second identified a gene mutation that substantially increases the risk of developing Alzheimer’s disease. The third discovered a mutation that protects against Alzheimer’s and the likely mechanisms for that protection.

With the acquisition of deCODE, Amgen has shown that it recognizes the power of genomics to make the drug development process more effective and productive. Amgen’s leaders know that genomics in drug R&D can lay the foundation of producing truly innovative medicines and technologies. That’s exactly where deCODE will help Amgen, and perhaps we will soon see other pharmaceutical companies follow suit with new genomics R&D initiatives.

[Editor's Note: deCODE is a portfolio company of Polaris Venture Partners and Arch Venture Partners.]

Terry McGuire is a co-founder and general partner of Polaris Venture Partners. Follow @CelticVC

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