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Variagenics: Lower-Risk Pharmacogenomics

Executive Summary

Despite its presumed intuitive appeal, the concept of applying pharmacogenomics to predict drug response remains largely unproven, and the handful of companies trying for a foothold in this market face challenges on several fronts: finding drug companies who've bought into the concept and are willing to collaborate, negotiating deals without the leverage of issued patents linking SNPs and haplotypes to drug response, and convincing investors both that the technology won't be commoditized, and that pharmaceutical firms won't bring it in-house and leave them in the cold. Variagenics is assuming that drug companies with whom it partners will use data from clinical trials that incorporate pharmacogenomic assays to obtain a label linking the sale of the drug and the use of the tests, which Variagenics will supply or license. As it seeks partners, Variagenics is also raising its visibility by collaborating with CROs and offering expertise and services to those drug companies and biotechs who have yet to devote resources to in-house pharmacogenomics programs but who want a taste of the technology.

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Pharmacogenomics: Promises and Problems

So far, pharmacogenomics, the study of the effects of an individual's genetic makeup on their response to drugs, has not produced the hoped-for revolution in the pharmaceutical industry, due primarily to lagging approvals and the high cost of molecular testing. Nevertheless, the promise of personalized medicine is very real, and several exciting products have received FDA approval.

Why Don't Big Pharmas Buy Pharmacogenomics?

Pharmacogenomics has disappointed advocates who saw the opportunity to apply a discovery tool to the near-term goal of increasing approval chances and marketability for late-stage and marketed compounds. In return, they hoped to take a percentage of the highest-cost segment of the pharmaceutical budget. But Big Pharma is by and large not using pharmacogenomics for late-stage and marketed compounds: senior executives don't believe there's enough evidence it works and are afraid of limiting the marketability of the products by segmenting broad target populations into niches. Some also worry about uncovering potential side-effects that non-pharmacogenomic trials wouldn't reveal. Nonetheless, pharmacogenomics has made it to Big Pharma: most companies, for example, are banking samples from clinical trials to be pharmacogenomically tested retrospectively, thereby informing future trials. Not that this means the pharmacogenomics specialists will be able to sign high-value deals with the commercial side of drug companies, who believe that pharmacogenomic analysis is available from a number of sources, including internal ones, and feel they own the key assets for creating meaningful programs: compounds and patient samples. Instead, pharmacogenomics will find its place first as a discovery technology, integrated with other methods for finding, validating and prioritizing targets. That means that to succeed selling pharmacogenomics, biotechs will have to combine their pharmacogenomic assets with other discovery technologies, perhaps through mergers. An alternative: use their technologies to find drug products that they can themselves develop, perhaps later out-licensing them.

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