Amgen said this week that its $415 million proposed acquisition of Icelandic genetics research firm Decode will bolster its ability to evaluate which molecules to advance through its pipeline.
Meanwhile, Amgen has no interest in keeping up Decode's direct-to-consumer genomics business. As such, Amgen's purchase of Decode will essentially whittle down an already small DTC genetic testing market to a single player: 23andMe.
When it was first launched in 1996, Decode intended to make money off its proprietary discoveries of novel gene-disease associations in the Icelandic population. The company even tried its hand at drug and diagnostic development. However, none of these strategies translated into significant revenue for Decode, and in 2009, the company filed for Chapter 11 bankruptcy. Eventually, Decode sold its assets to Saga Investments, which launched a new private entity with the same name.
In the years following its financial troubles, Decode focused its attentions on conducting and publishing genome-wide association studies. The firm's strategy appears to have finally garnered the attention of Amgen, which has recognized Decode's large database of genotypic and phenotypic information to be of strategic interest.
"Decode Genetics will provide Amgen with an industry-leading ability to identify and validate disease targets in human populations," an Amgen spokesperson told PGx Reporter. "This will enable Amgen to focus resources on programs that reach the right human disease targets, thus avoiding investments in programs based on less well-validated targets."
Decode has genotypic and medical data on 140,000 Icelanders, a geneology database that spans nearly all of Iceland's current population of around 300,000 people, and phenotypic data stored in an electronic medical record system. "It would be extremely difficult for any other company to replicate Decode’s combination of resources and expertise," the spokesperson said.
With these capabilities, alongside Decode's expertise in conducting statistical and bioinformatics analysis, Amgen is hoping to make more informed decisions about which drugs to advance and which to discard. Amgen believes that Decode's clinical and genomic data on thousands of Icelanders, spanning various diseases, will be "a unique and powerful resource" for the company. With the help of this data, the drug developer "will be able to review pre- and early clinical pipeline targets to determine if they are reaching the right disease targets in humans," the spokesperson added.
The Decode acquisition follows Amgen's $1.16 billion purchase earlier this year of cancer-focused biotech Micromet and $315 million buyout of KAI Pharmaceuticals, a company developing a treatment for hyperthyroidism.
'A Knowledge Game'
With Decode's genetics knowhow, Amgen will likely also be able to identify pharmacogenetic opportunities in its pipeline. However, the company spokesperson could not provide any details in this regard.
In the personalized medicine space, Amgen currently has only one marketed product: the colorectal cancer drug Vectibix. Based on clinical data showing that colorectal cancer patients with KRAS mutations don't respond well to the drug, the US Food and Drug Administration has informed doctors and patients that this molecularly defined subpopulation should not receive Vectibix or another drug in the same class, Bristol-Myers Squibb/Merck/Lilly's Erbitux (PGx Reporter 7/22/2009). Amgen is collaborating with Qiagen to advance an FDA-approved companion test for Vectibix.
Industry observers have criticized Amgen for not acting quickly enough to limit Vectibix's indication when data first emerged suggesting that KRAS-mutated patients wouldn't respond to the drug (PGx Reporter 2/24/2010). By acting late on establishing Vectibix in a molecularly defined patient population, Amgen lost the opportunity to preemptively differentiate its product from Erbitux, the market leader in colorectal cancer. With Decode's assets and expertise, Amgen may be able to establish a more efficient pathway for evaluating when a drug is efficacious or safe for a PGx-defined patient subset.
"Personalized medicine has become a knowledge game. The more you know about patient journeys and disease pathways the more you are inclined to develop evidence-based hypotheses about assets," Peter Keeling, CEO of personalized medicine-focused consultancy Diaceutics, told PGx Reporter over email. "The opposite is [also] true: The less you know about the disease and patient pathway, the more you need to react," he said, referring to drug developers' experience limiting the indication for Erbitux and Vectibix once it became known that patients with KRAS mutations didn't respond to these treatments.
Keeling believes that Amgen intends to use Decode's genomics data, interpretation expertise, and human samples to bolster its knowledge base and improve its ability to make timely pipeline decisions. However, since Amgen hasn't revealed any details about how Decode's capabilities will fit into its drug development workflow, it's unclear whether Amgen bought Decode hoping to gain input on specific internal drug programs or in particular disease areas, or whether the drug firm is still figuring it out. Additionally, since Decode's database contains information on a homogenous population, Icelanders, some industry observers have wondered how this would help drug development efforts at a company that aims to advance treatments in the global marketplace.
"Amgen [is] not really explaining the investor return here," Keeling said. "This is either because they have a secret IP position or that honestly, they do not have that argument well articulated. We can only conjecture that in the absence of any apparent big IP position that it is more the latter here."
Purchasing a private genetics research firm is an unusual move for a pharma company. When it comes to gaining genomics insights or advancing personalized treatments, drug developers have generally leaned toward partnerships with research organizations for the former and non-exclusive arrangements with diagnostic developers for the latter.
For example, Roche, which has said that 60 percent of its pharma pipeline products are being developed with a companion diagnostic, has chosen to set up regional hubs of scientific expertise in Singapore, Germany, and France by partnering with local research and medical institutions. Pharma companies have also inked collaborations with diagnostic firms, such as Myriad Genetics, Foundation Medicine, Abbott Molecular, Dako, and Qiagen, with a range of capabilities, including disease-specific research expertise, access to patient samples, genotypic and phenotypic data, unique testing platforms, CLIA labs, and in some cases, regulatory and reimbursement experience.
The day Amgen announced it was buying Decode, the drug firm's stock price got a bump from $87.96 when markets opened to $89.74 at market closing. Still, absent detailed strategic reasoning for the acquisition, some have questioned why Amgen didn't just partner with Decode. "Our question is … more about the cost they have paid for this and whether there are other equally efficient ways of obtaining this knowledge," Keeling observed. Although on the surface, Amgen appears to be positioning itself to advance personalized medicine products, "we question the price of admission given Amgen's peers' approach and use of capital to the same 'knowledge acquisition mission.'"
The acquisition is slated to be finalized by year end. The Amgen spokesperson added that the drug developer expects to retain Decode's existing staff following closure of the deal.
DecodeMe Defunct
Among its other activities, Decode operates a division called DecodeMe through which, for around $1,000, it analyzes peoples' genetic risk for various diseases and characterizes their response to certain medications. According to the Amgen spokesperson, the DTC testing component of Decode's business will no longer be available once it comes under the drug developer's aegis.
"Amgen does not intend to continue offering genomic screening tests to the public and healthcare providers. This is not a core part of Amgen’s business interest in Decode," the spokesperson said. "Employees and resources focused on this area will be realigned with other priorities and projects."
Industry insiders have previously observed that Decode's DTC testing business hasn't been a part of its growth strategy for some time. Given what it was charging for the service compared to competing DTC genomic test provider 23andMe, Decode had priced itself out of that market, without closing down the effort.
With Decode now officially out of the consumer genetics market, that leaves 23andMe as the only option for people interested in learning about their genetic makeup without going through a doctor. 23andMe charged $299 for its service until this week, when it lowered the price to $99 after it raised more than $50 million in a Series D financing round.
The additional cash, according to 23andMe, will be used to grow its genotyped customer base from 180,000 to 1 million, increase research capabilities, and accelerate treatment development. Drug developers have also shown interest in 23andMe's genotype and phenotype database, but so far, there haven't been any publicized attempts to acquire privately held 23andMe. Pharma companies, such as Genentech, have chosen to partner with the DTC genomics firm (PGx Reporter 8/1/2012, 6/29/2011).
Meanwhile, Gene by Gene recently launched a DTC division that will offer next-generation sequencing directly to consumers but will only provide them with the raw data. The prices for this services range from $695 for exome sequencing to $995 for mitochondrial sequencing and $5,495 for whole-genome sequencing. The company doesn’t interpret how customers' genomic information might be linked to diseases and drug response. As such, given Gene by Gene's model and price points, 23andMe will likely remain the main player in the consumer genetics market for the foreseeable future.
Since 2010, when the FDA began putting pressure on consumer genetics firms to obtain approval for the tests they sell, industry observers have predicted that the nascent industry's days were numbered (PGx Reporter 7/28/2010).
Navigenics, another player in the DTC genetic testing market, abandoned the DTC testing model after facing the threat of FDA regulation, choosing to market its genome-wide testing services through doctor's practices and employer groups interested in personalized medicine. In July, Navigenics was purchased by life sciences tools vendor Life Technologies, mainly for its CLIA-certified lab, which Life plans to use to validate and commercialize molecular diagnostics (PGx Reporter 7/18/2012).
Research Focus
Decode's primary focus in recent years has been uncovering common and rare variants associated with disease.
Post-bankruptcy, Decode shifted its focus from conducting genome-wide association studies for common disease-linked variants to using whole genome sequencing to identify rare variants linked to disease. The company has published a number of papers on rare variants linked to ovarian cancer, sick sinus syndrome, gout, and various cancers.
Additionally, in 2011, as reported by PGx Reporter sister publication In Sequence, Decode sequenced the genomes of approximately 1,500 Icelanders (IS 11/9/2011).
Decode also had a number of collaborations with drug developers. For example, Decode and Pfizer were working on analyzing genomes of lupus patients to discover variants that could lead to new drug targets.
As an Amgen subsidiary, it is likely that Decode will no longer be inking biomarker research collaborations with competing pharma companies. "Many of these [pharma] partnerships have expired or are expiring," the Amgen spokesperson said without elaborating.