Perspective Commercialization of genomics

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One of the great expectations of genomics in the 1990s was that it would radically and directly improve the business of drug discovery. This expectation contributed to the start-up of many genomics-based biotechnology companies and the build out of genomics infrastructure in large, established biotechnology and pharmaceutical companies.

The growth of genomics and the resulting boom in technology development have created a tremendous global impact on our knowledge and understanding of the molecular basis of life. This impact ranges from drug and pesticide discovery to industrial enzymology, to crop and livestock cultivation, to environmental remediation, to natural resource management and to criminal and civil law. The impact of these changes in technological underpinnings has also been reflected in other sectors focused more on societal implications, including public policy, education, journalism, fine arts and entertainment.

This includes Canada's investment, which -- through both Genome Canada and provincial initiatives -- has led over the past decade from relatively rare Canadian involvement on the world stage in genomics projects and consortia to a number of examples of recognized contribution and/or clear international leadership (e.g., the structures of human kinases, the sequences of salmon, poplar and bovine genomes, the metabalome compendium, species barcoding and the genetic basis and signaling mechanisms associated with cancer and other human diseases).1

However, there have also been surprises regarding the ways that genomics data and technology have improved or not improved the process of drug discovery.

Many more targets, but drug discovery did not become cheaper
Companies like Exelixis (see sidebar) used genomics and functional genomics to develop large collections of potential drug targets. It was remarkably successful at doing this but it, and the rest of the industry, quickly realized that the identification of additional targets, though opening up a number of new avenues, did not reduce the cost of drug discovery. In fact, as more targets were identified and pushed towards the clinic, the costs of clinical development increased rapidly, both in proportion to the number of targets and as a result of the higher failure rate of compounds going into the clinic with less biological knowledge associated with them.

These costs put tremendous pressure on companies to either triage its targets and the compounds associated with it to a very small number or raise phenomenal amounts of capital to support moving forward with multiple targets and compounds. Exelixis, for example, in part because it was on the leading edge of irrational exuberance in the late 1990s, and in large part because of great strategic success with establishing alliances and acquiring other companies, was able to raise the requisite capital and establish a rich pipeline of pre-clinical and clinical phase compounds.

Other companies, for example those raising funds on the trailing edge of irrational exuberance, have had to focus on selecting a single combination of compound and target and divesting themselves of most of its R&D capability not directly supporting the near-advancement of its compounds.
Affinium Pharmaceutics (see sidebar) is one example of a company that has advanced successfully with this strategy.

What is genomics?
Genomics is the holistic, systematic, and high-throughput characterization of genomes — the full complement of DNA underlying the genetic make-up of a given organism. Though smaller genomes had been previously completely sequenced, the consideration of the possibility of doing so for the human genome crystallized the notion of a new paradigm for the life sciences, intended to enable and accelerate traditional hypothesis-driven research.

'"Genomics'" has since been generalized to capture the application of this approach (holistic, systematic and high-throughput) to any and all aspects of life sciences, but many of these applications have also stimulated the coining of a much broader vocabulary of '"omics'" applications2, for example: functional genomics (the characterization of the cellular functions of the genome’s genes and proteins for which they code); proteomics (the characterization of all the kinds of proteins for which the genome codes); metabolomics (the characterization of all the metabolites in an organism); glycomics (the characterization of all the kinds of polysaccharide polymers attached to other macromolecules in an organism); and the self-referential omeomics (the catalogue of all '"omics'" applications).

Bioinformatics has not yet found a happy match to venture investment models
Bioinformatics has not yet found a happy match to venture investment models
There was also early excitement about establishing companies focused on the informatics aspect of genomics: either by developing proprietary database products and licensing those to the research community; or by developing software tools to analyze such data.

Though several of the early database companies (e.g., Incyte and Celera) experienced a brief boom with this business model, the rapid decrease in cost of generating the data, combined with government subsidized and publicly available versions of the same data, led to a rapid erosion of its licensing base.

For companies focused on software tools, the most sustained success (and there are a number that have sustained themselves before, during and after the Human Genome Project) has been among those least dependent on venture investment models and the expectation of rapid entry into market and expansion of revenue base. This expectation has often been undercut by the fact that the initial, intense development phase rarely stops: each life sciences customer wants and needs a customized version and the underlying sources and uses of the data change rapidly enough to severely subvert 'build once, sell many times' models.

Cognia (see sidebar), Ingenuity and Unleashed Informatics are examples of informatics companies that have focused on a middle ground of database products but with two important strategic choices that may lead to establishing a more ‘normal’ marketplace for its products: providing the database through fixed web service or black box hardware installations that reduce the engineering requirements for ‘productized’ software and by focusing on curated and integrated data offerings that offer considerable added value relative to the data that can be freely acquired from public sources.

Exelixis www.exelixis.com
1990 Founding scientists begin pitching to investors the use of fruit fly genetics to identify and characterize potential human drug targets.
1994 Company established in Cambridge and incorporated, focused on model system genetics and functional genomics in fruit fly.
1996 Company moves from Cambridge to Oakland, and then to South San Francisco.
2000 Company hires first chemists, and begins shift from target discovery to drug discovery and development.
IPO (NASDAQ:EXEL).
2007 Seven compounds in clinical trials, market cap of US$1B.

Cognia www.cognia.com
1998 Established in New York and incorporated, focused on aggregation and delivery of life science and other databases to pharma.
1999 Secures North American distribution rights to regulatory pathway information developed by BioBase (Germany).
2000 Company moved from New York to Mountain View. Shifts focus to molecular interactions, pathway representation, and integration of genomics data.
2001 Company moved from Mountain View to New York.
2005 Drawing on public-private partnership funds in Scotland, establishes subsidiary text mining R&D unit in Edinburgh.
2006 Company announces first proprietary database product (ubiquitin system).
2007 Expansion of Edinburgh effort. Text mining IP license secured.

The promise of biomarkers generated by
genomics and proteomics strategies
Though the long race from upstream genomics to downstream clinical testing is a real part of translating genomics into the marketplace, there has been recent excitement about the promise of a shorter time to market for diagnostic and prognostic tests based on biomarkers being identified and characterized with genomics and proteomics approaches. This excitement is in part because of its potential for application to clinical trial design and patient stratification testing.

Combimatrix Molecular Diagnostics, Genomic Health, Jaguar Bioscience (see sidebar) and XDx are a small subset of many companies that have recently gotten off the ground or shifted focus to laboratory services or kits based on such biomarkers. The IPO of Genomic Health (NASDAQ:GHDX) 18 months ago on the strength of a single test (based on gene expression profiling) for breast cancer applications was stimulating for this model.

It is worth noting that oft-cited adage, that selling shovels to miners offers a more predictable path to wealth than digging for gold, is applicable to genomics as well. A number of companies focused on providing instruments and reagents to academic and commercial genomics researchers have done very well. Examples over the past decade include Affymetrix, Applied Biosystems, Illumina and MDS Sciex.

Affinium Pharmaceuticals www.afnm.com

1997 Borealis established in Toronto, focused on mass spectrometry and protein identification services for the proteomics research community.
1998 Charon established in Toronto, focused on determination of protein structures in the context of structural proteomics.
2000 Borealis and Charon merged to establish Integrative Proteomics, focused on generating functional and structural proteomics data for potential drug targets in humans (and the organisms that infect them).
2002 Name changed to Affinium Pharmaceuticals to reflect increasing focus on drug discovery and development.
2005 Company enters into and emerges from capital restructuring, while maintaining an outsource approach to advancing pre-clinical development of their lead compound.
2007 Raises $18M to advance lead pre-clinical antibiotic compound into the clinic.

Jaguar Bioscience www.JaguarBioscience.com

2004 Company established in Toronto and incorporated, based on IP out of University of Toronto and University Health Network, focused on developing a prognostic test for response to HCV treatment using expression arrays.
2006 First patent application published.
2007 Business development towards establishing alliances with established diagnostics companies.

Looking forward
Genomics strategies are now being applied and will continue to be applied, not only to sequencing the genomes of hundreds of organisms, but to understanding the full repertoire of molecules in the cell and its functional and structural relationships with one another. This will continue to lead to the creation of database resources, reagents and instrumentation that greatly accelerate the life sciences research enterprise.

Biotechnology will flourish, in part based on global access to these resources, but in particular in locations that have built the critical mass of scientists as well as operational and technological infrastructure – both in academia and the private sector – that provide the wellspring for new ventures that attract capital and collaborative alliances.

References:
1 Genome Canada’s web site (www.GenomeCanada.ca) provides descriptions of the projects they have funded, instances of recognition those projects have garnered, and links to the regional genome centres and their initiatives.
2 Among a number of journal articles and web sites contemplating this etymological expansionism, see http://en.wikipedia.org/wiki/Omics

Dr. Christian Burks was educated at St. John's College (Great Books) and Yale University (PhD). As a graduate student in Donald Engelman's group, he developed an interest in computational approaches to managing and analyzing molecular biological data. This led to a post-doctoral fellowship at Los Alamos National Laboratory with Walter Goad. There, he was a member of the group that established GenBank, the international repository for DNA sequences and he went on to oversee the project, which was undertaken in collaboration first with BBN (Cambridge) and then IntelliGenetics (Mountain View). While on sabbatical at the University of California, he joined Exelixis in the Bay Area to oversee their informatics effort, ultimately as Chief Informatics Officer. He then moved to Toronto as chief scientific officer for Affinium Pharmaceuticals. In 2004, he joined Ontario Genomics Institute as its president and CEO. He serves on oversight or advisory boards of several companies, including ITI Life Sciences, Cognia and Jaguar Bioscience.