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The State of Investing in Antibody Technology

This article was originally published in Start Up

Executive Summary

Since December 2001, only two privately held antibody firms have raised more than $15 million in a round of financing. Moreover, the older public companies founded on the promise of disruptive antibody development technologies, principally Abgenix and Medarex with fully human antibodies, and Human Genome Sciences with its antibody-driven genomics discovery science, have yet to validate those platforms through successful clinical product development. Even antibody humanization specialist Protein Design Labs, which has marketed antibody products from which it's getting royalties, is still selling for not much more than its cash value. Yet despite a fall-off in investments in this core area of biotech drug development, VCs still say antibodies will provide a range of successful new therapies.

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Large Molecules: Too Late For Big Pharma?

At a time when the pharmaceutical industry is desperately looking for ways to increase productivity and fatten pipelines, it would only seem sensible for drug companies to maximize their opportunities by creating substantial large molecule capabilities. But even with the renewed interest in monoclonal antibodies, there's little evidence that more than a few major drug companies have made a serious commitment to macromolecule drug discovery and development. Some industry observers contend that companies failing to make such a commitment do so at considerable peril. On the other hand, new technologies may help to make large molecules easier, cheaper, and thus more palatable for drug firms to work with. The question is whether those companies caught up in the small molecule paradigm will seize the opportunity before being left in the dust by those already focusing on macromolecules.

Big Molecules and Big Pharma

"Catch a wave and you're sitting on top of the world." Richard DiMarchi, Eli Lilly & Co.'s group VP, research technologies, recalled Brian Wilson's lyric at Windhover Information Inc.'s 2001 Pharmaceutical Strategic Alliances conference as he pointed to a chart illustrating the exponential growth of genetic information generated over the past five years. "The question here," remarked DiMarchi, "is whether you can surf a Tsunami." Citing recent reports from Accenture and Lehman Brothers warning the drug industry to exercise extreme care in attempting to commercially exploit the fruits of genomics, DiMarchi went on to advise, "I think you're going to need a heckuva lot of wax to surf this wave, but this is where the future is and you need to be a part of it." One way for drug companies to compete in this new environment is to have the flexibility to work in both large molecule and small molecule therapeutics. Lilly has a strong commitment to protein-based drugs, and, in his presentation, DiMarchi discussed the economic/scientific advantages of working in small molecules, as well as the obstacles for companies that choose to do so.

What Lies Behind the Curtain at HGS?

With Human Genome Sciences freed from obligations to share its genomics data exclusively with the 6-company human gene therapeutic consortium, HGS is set to look for its own new product-oriented alliances. But the 8-year-old company and its consortium have yielded only four compounds in clinical trials. HGS CEO William Haseltine says that the company can leverage its tremendous assets to strike potentially rich deals. The key question is how many human therapeutic proteins remain to be uncovered.

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