By Michael G. King, Jr.
The pharmaceutical industry has long appreciated the need to identify or “solve” the unique three-dimensional shapes of proteins. Structure-based drug discovery is a proven technology that has led to the development of such drugs as HIV protease inhibitors and neuraminidase inhibitors.
But the hurdles to doing protein structure determination are numerous: technical difficulty, low throughput, inadequate technology, and extremely high costs, to name a few. Vertex Pharmaceuticals is possibly the only mature biopharmaceutical company whose core technology is based on structure-aided drug design. The company has proven itself with a marketed drug, Agenerase for HIV, and with greater than 15 programs in various stages of advanced development.
Now novel approaches in “rational drug design,” a more targeted method than traditional trial and error, involving in silico structural design, cloning, protein purification, and x-ray crystallography, have expedited the process and are resulting in the emergence of a new sub-sector of biotechnology companies. As large pharmaceutical companies demonstrate the desire to buy or in-license structure-determination technology rather than build it themselves, competition for their business is heating up. Due to the infancy of the field and the significant technological barriers to entry, competition is limited to a number of startup companies. None of these are public yet, and so not included on the GTI.
But we’re looking at their businesses now in anticipation of that day. Recall the parameters for inclusion in the GTI: a company chiefly concerned with genomics; one primarily in the business of developing data, software, equipment, consumables, or services; and one pursuing a broad commercial market for its technology. Any of these so-called structural genomics outfits would qualify should they go public.
One business strategy applies proprietary technologies that bypass historical bottlenecks in the protein-structure determination process through factory-like automation, robotics, and miniaturization to rapidly produce protein structures from genetic information and use these structures to identify drug candidates. This high-throughput industrial process represents a unique “gene to drug” platform based on the ability to perform high-throughput, rational drug discovery and identify drugable targets by a large-scale comprehensive approach. Another business model is based upon the exploration of advanced structural bioinformatics tools to choose proteins, but in a more gene-family focused manner. Finally, a third develops and utilizes software tools to enable high-throughput x-ray crystallography.
Of these business models, we have yet to see which will come out on top as all the companies are slowly yet readily entering the marketplace. Each strategy has a benefit unto itself that will succeed depending on the desires of potential partners. With the potential for large pharmaceutical service and drug development collaborations, the ability to bring traditionally difficult-to-solve molecules into development and the capacity to create proprietary drug discovery pipelines, these companies are becoming more compelling. While many of the companies in this space are still privately held, the opportunity for future investment exists as the companies gear up to enter the public market and we await novel drugs to enter development.
Michael G. King, Jr., is a managing director and senior biotechnology analyst focusing on the genomics sector for Robertson Stephens.
Robertson Stephens research analyst Edward Tenthoff and research associate Ellen Lubman also contribute to Genomoney.
Robertson Stephens, which has not independently verified the information contained in this article, maintains a market in the shares of Vertex Pharmaceuticals.